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When referring to this work, the full bibliographic details must be given as follows:
J aber, F. (2012) Organisational adoption of CRM in Jordan. PhD Thesis. Oxford Brookes University.

I








Organisational Adoption of CRM in
Jordan

Faten Jaber






This thesis is submitted in partial fulfilment of the requirements
of Oxford Brookes University for the award of
Doctor of Philosophy

Department of Marketing
Faculty of Business
October 2012



II


Acknowledgements

Completing my PhD degree has been a challenging and unforgettable experience
which I mostly enjoyed. However, it would not have been possible to write this thesis
without the help and support of many people around me. First and foremost, I am
especially grateful to Almighty God for giving me everything I am. My deep sincere
appreciation goes to Adam Abbad my son, and my husband Muneer Abbad, for their
encouragement, support, and all they have done for me during the research process.
Their love provided my inspiration and was and remains my driving force.
I am especially grateful to my first supervisor, Professor Lyndon Simkin for the
opportunity he offered me to join the department research active group. This thesis
would not have been possible without his enthusiastic supervision and valuable
suggestions during this work. He not only supervised my work but also gave me the
inspiration to always improve what had been achieved. His good advice and deep
knowledge have been invaluable on both an academic and a personal level. He was
and remains my best role model for a researcher, mentor and teacher.
My sincere gratitude also goes to my second supervisor, Dr Ana Domingos Canhoto
for her invaluable support. I would like gratefully to acknowledge her enthusiastic
supervision, guidance, insightful ideas, and critical review comments. I would also
like to send my appreciation to Professor Yuksel Ekinci for his efforts, feedback,
insightful discussions, and guidance.
This list is incomplete without acknowledging the efforts of my mother and father. I
deeply thank them for everything they have done for me, and for their continued love
and support. It is difficult for me to express adequately my gratitude to my parents,
who never ceased praying for me and wishing me every success. I owe them
everything.
My heartfelt thanks also go to my sisters, brothers: Reham, Mohammad, Raneem,
Ahmad and Mona, who showed kind concern for my health and studies, and to my
friends and colleagues in the UK who made me feel at home away from home. I thank
them all and pray that God will keep them safe.

I dedicate this thesis to my son, husband and parents.


III

Table of Contents
Acknowledgements ....................................................................................................... II
List of Tables ............................................................................................................. VII
List of Figures ........................................................................................................... VIII
Abstract ........................................................................................................................ IX
Chapter 1: Introduction .................................................................................................. 1
1.1 Introduction ..................................................................................................................... 1
1.2 Background of the Study ................................................................................................. 1
1.3 Research Problem............................................................................................................ 3
1.4 Aims, Objectives and Research Question ....................................................................... 4
1.5 Scope of the Study .......................................................................................................... 5
1.6 Contribution of the Study ................................................................................................ 7
1.7 Jordan as a Research Context .......................................................................................... 8
1.8 Thesis Structure ............................................................................................................. 10
Chapter 2: Literature Review on CRM and its Adoption .................................... 10
Chapter 3: Research Methodology ....................................................................... 10
Chapter 4: The Conceptual Framework ............................................................... 10
Chapter 5: Research Model and Scale Development ........................................... 11
Chapter 6: Data Analysis and Findings ............................................................... 11
Chapter 7: Discussion of Results ......................................................................... 11
Chapter 8: Conclusions, Implications and Further Research ............................... 12
Chapter 2: Literature Review on CRM and its Adoption ............................................ 13
2.1 Introduction ................................................................................................................... 13
2.2 Relationship Marketing (RM) and Customer Relationship Management (CRM) ........ 13
2.2.1 What is Relationship Marketing? ................................................................ 13
2.2.2 Relationship Marketing Schools ................................................................. 15
2.2.3 The Role of IT in Relationship Marketing .................................................. 20
2.3 Customer Relationship Management (CRM) ................................................................ 21
2.3.1 What is CRM? ............................................................................................. 21
2.3.2 Types of CRM ............................................................................................. 26
2.3.3 CRM in E-Business ..................................................................................... 27
2.3.4 Software Vendors in the CRM Marketplace ............................................... 28
2.3.5 CRM Adoption ............................................................................................ 29
2.4 CRM Adoption from the Marketing Perspective .......................................................... 32
IV

2.4.1 Customer-Centric Orientation and CRM .................................................... 32
2.5 CRM Adoption from the IT Perspective ....................................................................... 40
2.5.1 Knowledge Management ............................................................................ 40
2.5.2 Usage and Employee Adoption of CRM .................................................... 42
2.6 CRM Adoption from the Management Perspective ...................................................... 53
2.6.1 Strategic Planning ....................................................................................... 53
2.6.2 Internal Marketing ...................................................................................... 55
2.6.3 Organisational Climate, Culture and Leadership ........................................ 58
2.6.4 Project Management ................................................................................... 64
2.7 The Impact of Organisational Characteristics on CRM Adoption ................................ 67
2.8 Summary ....................................................................................................................... 68
Chapter 3: Methodology .............................................................................................. 70
3.1 Introduction ................................................................................................................... 70
3.2 Research Philosophy ..................................................................................................... 70
3.3 Research Approaches .................................................................................................... 73
3.4 Research Strategy .......................................................................................................... 74
3.5 Research Methods ......................................................................................................... 77
3.5.1 Interviews .................................................................................................... 77
3.5.2 Questionnaire .............................................................................................. 79
3.6 Sampling Design and Procedures .................................................................................. 81
3.6.1 Sampling ..................................................................................................... 82
3.6.2 Sampling Frame .......................................................................................... 82
3.6.3 Sample Size ................................................................................................. 84
3.6.4 Sampling Techniques .................................................................................. 86
3.7 Summary ....................................................................................................................... 89
Chapter 4: Conceptualisation and Formulating Research Hypotheses ........................ 90
4.1 Introduction ................................................................................................................... 90
4.2 Purpose of Exploratory Interviews ................................................................................ 90
4.3 Sample Selection and Characteristics ........................................................................... 92
4.4 Design of Interview Questions ...................................................................................... 95
4.5 Results and Hypotheses ................................................................................................. 96
4.5.1 CRM Meaning ............................................................................................ 96
4.5.2 CRM Adoption .......................................................................................... 101
4.5.3 Factors Affecting CRM Adoption ............................................................ 105
V

4.6 Conceptual Framework ............................................................................................... 126
4.7 Summary ..................................................................................................................... 128
Chapter 5: Research Model and Scale Development ................................................. 130
5.1 Introduction ................................................................................................................. 130
5.2 Stages of Developing the Research Model ................................................................. 130
5.2.1 Reviewing the Literature ........................................................................... 131
5.2.2 Developing the Research Framework ....................................................... 132
5.2.3 In-depth Individual Interviews .................................................................. 132
5.2.4 Building the Model ................................................................................... 132
5.2.5 Developing the Instrument ........................................................................ 133
5.2.6 Collecting Data ......................................................................................... 142
5.2.7 Analysing Data .......................................................................................... 143
5.2.8 Confirmatory Study .................................................................................. 143
5.3 Summary ..................................................................................................................... 144
Chapter 6: Data Analysis and Findings ..................................................................... 145
6.1 Introduction ................................................................................................................. 145
6.2 Characteristics of the Sample ...................................................................................... 145
6.2.1 The Characteristics of Organisations ........................................................ 145
6.2.2 Demographics of the Respondents ............................................................ 147
6.3 Statistical Techniques.................................................................................................. 149
6.4 Data Analysis Strategy ................................................................................................ 150
6.5 Exploratory Factor Analysis ....................................................................................... 152
6.5.1 Findings of the Exploratory Factor Analysis (EFA): Factors affecting CRM
adoption .............................................................................................................. 155
6.6 Confirmatory Factor Analysis (CFA) ......................................................................... 165
6.6.1 Goodness-of-fit Measures ......................................................................... 165
6.7 Validity and Reliability of the Measures ..................................................................... 170
6.8 Testing of the Research Model: Structural Equation Modelling (SEM) ..................... 175
6.8.1 Factor Means and Standard Deviations .................................................... 176
6.8.2 Analysis of Structural Model .................................................................... 176
6.8.3 The Final Model ........................................................................................ 182
6.9 Hypotheses Testing ..................................................................................................... 187
6.9.1 Effects of the Adoption Factors on Employee Perception ........................ 189
6.9.2 Effects of Employee Perceptions on CRM Implementation ..................... 189
VI

6.10 The Impact of Organisational Characteristics on Adoption (ANOVA) .................... 190
6.11 Summary ................................................................................................................... 193
Chapter 7: Discussion ................................................................................................ 195
7.1 Introduction ................................................................................................................. 195
7.2 Model Development .................................................................................................... 195
7.3 CRM Adoption ............................................................................................................ 198
7.4 Factors Affecting CRM Adoption ............................................................................... 199
7.4.1 Marketing Discipline ................................................................................ 200
7.4.2 Management Discipline ............................................................................ 202
7.4.3 IT Discipline ............................................................................................. 211
7.5 The Impact of Organisational Characteristics on CRM Adoption .............................. 214
7.6 Summary ..................................................................................................................... 215
Chapter 8: Conclusions, implications and Further Research ..................................... 218
8.1 Introduction ................................................................................................................. 218
8.2 Objectives and Conclusions ........................................................................................ 218
Objective 1: to evaluate extant literature of CRM from the marketing,
management and IT disciplines. ........................................................................ 218
Objective 2: to propose a conceptual research framework for understanding the
factors influencing the adoption of CRM. ......................................................... 222
Objective 3: to empirically identify the factors affecting organisational adoption
of CRM. ............................................................................................................. 223
Objective 4: To offer insights into CRM adoption and its paradoxes. .............. 225
8.3 Theoretical Implications .............................................................................................. 226
8.4 Managerial Implications .............................................................................................. 229
8.5 Limitations and Future Research ................................................................................ 231
8.6 Summary ..................................................................................................................... 233
References .................................................................................................................. 234
Appendix 4.1: Participant Information Sheet: Individual Interview ......................... 259
Appendix 4.2: Consent Form ..................................................................................... 262
Appendix 4.3: Interview Guideline ............................................................................ 263
Appendix 4.4: A summary of one interview .............................................................. 265
Appendix 5.1: Participant Information Sheet: Questionnaire .................................... 271
Appendix 5.2: Questionnaire (English version) ......................................................... 274
Appendix 5.3: Inter-item Correlations ....................................................................... 282

VII

List of Tables
Table 2.1 Comparison of Main Components of Major Schools of Relationship Marketing .... 19
Table 2.2: Forms of Operational CRM ..................................................................................... 26
Table 2.3: A List of Sub-factors for Each Factor in the Conceptual Framework ...................... 69
Table 3.1: The Main Features of the Quantitative and Qualitative approaches ..................... 76
Table 3.2: A Brief Profile of the CRM Experts .......................................................................... 83
Table 3.3: Different in Sample Sizes at a Confidence Level of 95% ......................................... 85
Table 4.1: Details of the Samples ............................................................................................ 93
Table 4.2: Subcategories Associated with Main Categories of Strategic Planning ............... 105
Table 4.3: Selected Representative Comments from the Respondents about Internal
Marketing Elements .............................................................................................................. 113
Table 4.4: Selected Comments from The Respondents about Culture and Leadership ....... 116
Table 4.5: Selected Representative comments from the Respondents about Project
Management ......................................................................................................................... 119
Table 4.6: Selected Representative Comments from the Respondents About Innovation
Characteristics ....................................................................................................................... 121
Table 4.7: A List of Hypotheses ............................................................................................. 127
Table 4.8: A List of Sub-Factors for each Factor in the Conceptual Framework 1 ................ 128
Table 5.1: A List of Observed Variables (indicators) for Each Unobserved (Latent variables)
............................................................................................................................................... 135
Table 5.2: Adoption Scale Items ............................................................................................ 136
Table 5.3: Scale Items for the Strategic Planning Sub-factors ............................................... 137
Table 5.4: Scale Items for the Strategic Planning Sub-factors ............................................... 138
Table 5.5: Scale Items for the Culture and Leadership Sub-Factors ...................................... 139
Table 5.6: Scale Items for the Internal Marketing Sub-Factors ............................................. 140
Table 5.7: Scale Items for the Project Management Sub-Factors ......................................... 141
Table 5.8: Scale Items for the Innovation Sub-Factors .......................................................... 141
Table 5.9: Scale Items for the Knowledge Management Sub-Factors142
Table 6.1: Organisations Characteristics Information (n=301)............................................. 146
Table 6.2: Respondents Demographic Information (n=301) ................................................ 148
Table 6.3: KMO and Bartlett's Test ........................................................................................ 156
Table 6.4: Results from Factor Analysis of Items with Factor Loading > 0.5 ......................... 158
Table 6.5: Proposed Hypotheses Resulting from EFA ........................................................... 164
Table 6.6: Recommended Goodness-of-fit Measures ........................................................... 166
Table 6.7: CFA Statistics of Model Fit .................................................................................... 168
Table 6.8: Measurement/Observed Variables Left After the Modification Indices .............. 169
Table 6.9: Convergent Validity test results............................................................................ 172
Table 6.10: Factor Correlations Matrix .................................................................................. 173
Table 6.11: AVE and Squared Correlations ............................................................................ 174
Table 6.12: Factor Means and Standard Deviations .............................................................. 176
Table 6.13: Loading Estimates for CFA and SEM ................................................................... 178
Table 6.14: SEM Statistics of Modes Fit ................................................................................ 183
Table 6.15: Results of SEM Analyses for Model 2 and Model 3 ............................................ 184
Table 6.16: Standardised Effects for Model 2 ....................................................................... 187
Table 6.17: A Summary of Hypotheses ................................................................................. 188
VIII

Table 6.18: Industry Descriptive Statistics and One-Way ANOVA Results ............................ 190
Table 6.19: Age Descriptive Statistics and One-Way ANOVA Results ................................... 191
Table 6.20: Firms Turnover Descriptive Statistics and One-Way ANOVA Results ................ 191
Table 6.21: Operation Descriptive Statistics and One-Way ANOVA Results ......................... 192
Table 6.22: Speed of Response to Change Descriptive Statistics and One-Way ANOVA Results
............................................................................................................................................... 193
Table 7.1: A List of Sub-Factors for each Factor in the Proposed Conceptual Framework 1 .196
Table 7.2: Summary of Hypotheses and Results ................................................................... 198

List of Figures
Figure 1.1: Three Perspectives on CRM ..................................................................................... 5
Figure 2.1: Perspectives of Relationship Marketing ................................................................ 15
Figure 2.2: Three Perspectives on CRM ................................................................................... 22
Figure 2.3: A Continuum of CRM Views .................................................................................. 23
Figure 2.4: Relationship Marketing and CRM- a Hierarchy ..................................................... 24
Figure 2.5: Theory of Reasoned Action ................................................................................... 43
Figure 2.6: Decomposed Theory of Planned Behaviour (DTPB) .............................................. 45
Figure 2.7: Technology Acceptance Model (TAM) .................................................................. 47
Figure 2.8: Technology Acceptance Model 2 .......................................................................... 51
Figure 3.1: The Interrelationships between the Building Blocks of Research ......................... 72
Figure 3.2: Stages of Developing the Research Model .......................................................... 131
Figure 4.1: Conceptual Model ............................................................................................... 126
Figure 5.1: Stages of Developing the Research Model..........................................................141
Figure 6.1: The Main Steps and Techniques Used in the Quantitative Data Analysis ........... 151
Figure 6.2: Scree Plot Test for All Factors Affecting CRM Adoption ...................................... 160
Figure 6.3: Proposed Model Resulting from EFA ................................................................... 163
Figure 6.4: Revised Measurement Model ............................................................................. 175
Figure 6.5: Full Mediation Model (Model 1) ......................................................................... 180
Figure 6.6: Partial Mediation Model A (Model 2).................................................................. 181
Figure 6.7: Partial Mediation Model B (Model 3) .................................................................. 182
Figure 6.8: Final Model .......................................................................................................... 186
Figure 7.1: Proposed Research Framework 2 ........................................................................ 197
Figure 7.2: Summary of Factors Affecting CRM Adoption ..................................................... 216

IX

Abstract

The primary question addressed in this research is: what are the factors affecting
organisations adoption of CRM? The customer relationship management system
(CRM) is an information technology system that effectively manages interaction and
long-term relationship with customers. The number of organisations in the world
adopting CRM has been rapidly increasing and the concept of CRM has resonated
considerably in recent years with both academics and practitioners. While literature
often cites CRM projects as failing to deliver promised improvement in business
performance, our empirical knowledge about what constitutes a successful adoption of
CRM remains inherently narrow. The potential for substantially improved customer
relationships and the tremendous amount of confusion regarding what constitutes
successful CRM adoption, calls for a critical investigation into the adoption process,
and its key success factors. To do this, the research aims to develop effective
guidelines to assist in the adoption of CRM in organisations, by showing that the
concept of CRM is a joint development between marketing, management and IT
disciplines.
The methodology in this study is based on mixed methods by combining qualitative
and quantitative approaches. There were two phases of data collection for this
research. The qualitative exploratory study with varied stakeholders dealing with
CRM was conducted to assess and explore the relevance of factors identified from the
literature, and to contextualise the research question in relation to organisations in
Jordan. The question led to the design of a survey instrument completed by 321
practitioners from ten organisations across four sectors (banking and finance,
telecommunication, hospitality, and automotive) in Jordan. The data was then
analysed using a variety of appropriate statistical techniques such as Exploratory
Factor Analysis (EFA). In the light of the EFA, the hypotheses of the study were
modified to accommodate the underlying structure of identified factors. In order to
test the conceptual model with relevant hypotheses, structured equation modelling
(SEM) was performed.
This study provides insight into the complexity of CRM through a new multi-
disciplinarily approach, which alters the view of CRM amongst academics and
practitioners and brings about a new understanding of what constitutes CRM. This
approach serves the study purpose of developing a holistic picture of the impetus of
CRM adoption in organisations. Moreover, two different perspectives are
investigated, at individual (employee) and at organisational level. By doing so, this
study unravels the complexity of CRM adoption process.
Analysis results revealed that employees perception of CRM benefits serves as
reasonable proxy for actual organisational implementation. In this study, there were
four factors found to influence and explain employee perception of CRM: i) having a
clear objective of CRM influences, ii) strategically measuring CRM performance, iii)
X

traditional segmentation analysis, and iv) knowledge management. Moreover, there
were three factors which were found to have direct impact on the implementation
stage: i) clear direction of CRM, ii) rewarding usage, and iii) managing project
changes.
Theoretical and practical implications based on the current study results and their
meanings emerged to shed new light on the potential processes and practices which
managers can use to address the complexity of CRM, enabling them to exploit the
potential of CRM. Moreover, this study has considered a holistic approach to CRM
and its adoption, and has highlighted key areas of poorly implemented practices. It
represents one of the rare attempts to thoroughly incorporate different elements of
CRM into the adoption process and illuminating reasons that explain the adoption
process hierarchy.
1

Chapter 1: Introduction
1.1 Introduction
This chapter discusses the rationale and the purpose of the study. It begins first with a
rationale for investigating CRM adoption within organisations. Second, it formulates
the research question in tandem with the specific objectives of the study. Third, it
specifies the scope of the study by identifying different perspectives of CRM. Fourth,
it outlines the expected theoretical and practical contributions of the study. Fifth,
information about the economy of Jordan and the compositions of Jordanian business
is provided. Sixth, the methodology used to achieve the research aims is briefly
discussed. Finally, the chapter ends with an outline of the study summarising its
contents.
1.2 Background of the Study
In this decade, a shift from one marketing trend to another seems inevitable, given
changes in emergent technology and how these impact upon marketing concepts. One
of these concepts relates to how businesses should engage with, interact with and
adapt to changes in customer needs. Consequently, most businesses are increasingly
integrating technology into their overall marketing plans to obtain insights into
customer behaviour, to engage with customer expectations, and to build long-term
relationships (Gummesson and Grnroos, 2012). As competition increases, businesses
are challenged to look for innovative approaches to enhance marketing effectiveness
with the goal of creating mutual values (Sheth and Parvatiyar, 1995). In order for
companies to survive in todays competitive environment, the traditional transactional
approach to marketing has begun to shift towards relationship-based marketing
strategies; building long-term relationships with customers is better than taking
advantage of the customer in short-term exchanges. This requires a shift in
perspective to emphasising involvement and engagement of customers in long-term
relationships, so that more can be learned about individual customer needs.
Recent marketing research into changes in the business environment has highlighted a
rising trend in the costs of acquiring customers, whilst the cost of retaining customers
has proven considerably less costly and more profitable (Alshawi et al., 2011).
According to Payne (2006), marketers should be able to substantiate Paretos 80/20
principle, whereby a relatively small number of customers account for the majority of
the business profits. In the light of this perception, the most important task of
marketing is to serve profitable customers in ways that develop and enrich their
relationships with the firm (Zeithaml et al., 2001; Persson, 2013). To create
relationships with profitable customers means that the business provides them with
continuous services, finds new ways to offer satisfaction and finds new sources of
value.
According to marketing research leaders, relationship marketing is one of the
emerging paradigms of modern marketing, delivering a new conceptual understanding
2

of how marketing functions in context (Morgan and Hunt, 1994; Chaffey, 2008). The
emergence of relationship marketing signifies a paradigm shift from the traditional
concept of transactional marketing (Grnroos, 1994; Hung et al., 2010). This
emerging concept focuses on long-term interactions leading to repeat purchases. Its
objective is to establish, maintain and enhance customer relationships. The origin of
relationship marketing stems from the disciplines of business-to-business and services
marketing, which are more likely to benefit from adopting this relational approach
(Harwood et al., 2008).
For this emerging concept to be developed successfully, it is likely that relationship
marketing would profit from advances in technology, as it provides enhanced
opportunities for organisations to use information/data to build, manage, and sustain
long term relationships with customers (Payne, 2006;

Lin et al., 2010). One important
tool which has evolved for effectively managing interactions in long-term
relationships is known as the customer relationship management system (CRM). As a
result, the focus within marketing has gradually moved from relationship marketing to
the Customer Relationship Management (CRM) which has been defined as the a
strategic approach concerned with creating improved shareholder value through the
development of appropriate relationships with key customers and customer
segments. (Payne, 2006:22).
A cynical view may consider CRM systems as old hat or already dealt with fully.
Taking a more holistic view, however, it is more likely that, although CRM has
become a well-used term attracting considerable criticism over time, it remains a
prominent area of research integrating different research streams in the marketing
literature. At the heart of this observation lies revived interest in organisational
adoption of CRM (Alshawi et al., 2011; Ling-yee, 2011), customer engagement
(Verhoef et al., 2010), social media (Harrigan et al., 2011), trust and effective
commitment (Aurier and Lanauze, 2012), dark sides (Frow et al., 2011), unfairness
(Nguyen and Mutum 2012), and profitability and segmentation (Ernst et al., 2011;
Meadows and Dibb 2012).
CRM is a result of advances in technology which have been targeted at effective
management interaction and long-term relationships with customers. It helps
organisations to adapt to changes in their customers needs, which in turn will create
competitive advantage. Therefore, the number of organisations adopting CRM is
rapidly increasing and the concept of CRM increasingly resonates with businesses and
researchers in todays competitive environment. However, critics point that some
CRM projects have failed to deliver the promised improvement in business
performance (Frow et al., 2011). Such criticisms can be countered by arguing that to
date, our empirical knowledge of what constitutes a successful adoption of CRM
remains inherently narrow

(Payne, 2006). The considerable confusion as to what
constitutes successful CRM adoption, and its potential for substantially improved
customer relationships, calls for a critical investigation into current adoption
3

processes, and an evaluation of which key success factors have helped other
organisations to manage CRM adoption more effectively, leading to better financial
performance. Responding to this, the research aims to develop guidelines which will
effectively assist organisations in the adoption of CRM, by showing that the concept
of CRM is a joint development between marketing, management and IT disciplines.
1.3 Research Problem
CRM plays a crucial role in modern marketing strategies (Gummesson, 2008). Over
the last two decades there has been rapid growth in the number of organisations
integrating CRM into their strategies and systems. However, given that CRM of
necessity is integral to a businesss system, the effective introduction of CRM poses a
considerable challenge to businesses which are not yet ready to adapt their
organisational behaviour to the system. Indeed it has been suggested by many
practitioners and researchers of CRM that it is this inability to adapt their
organisational behaviour which has led CRM to fail to fulfil many businesses
expectations, One explanation is that the complex nature of CRM creates differences
in tactical emphasis and a lack of agreement as to the precise definition of CRM
(Pedron and Caldeira, 2011). Nevertheless, CRM is viewed in this study as a strategic
approach facilitated by technology, which aims to handle relationship marketing in
practice. Hence it is a fundamental concept that links business and IT disciplines.
CRM issues have emerged in the literature within the business and IT disciplines,
with considerable overlap between the two fields. However, there are distinct
differences in the focus of CRM research between the two literature fields. From the
business discipline, CRM is involved with marketing and management disciplines and
reflects the development of marketing strategies that focus on customers. Researchers
in the business literature have focused on business strategy (Buttle, 2008), relationship
marketing (Gummesson, 2008), and customer-centric orientation (Baker and Hart,
2007). Business researchers also emphasise that CRM implementation needs the
essential of relationship marketing to be accepted as a customer strategy across all
levels of organisation (Goodhue et al., 2002). On the other hand, the IT discipline has
focused on software application use, design, implementation, and support.
Researchers from this field have attempted to make efficient use of the technology to
achieve value for businesses and are concerned with critical success factors involved
in technology implementation and use (Romano and Fjermestad, 2003; Goldenberg,
2008). Although researchers from different disciplines have focused on different
aspects of CRM, a fair overlap between these disciplines seems to exist. Especially
with regards to CRM functions, it is worth mentioning that researchers from the IT
discipline have discussed CRM characteristics and usefulness, which are noticeably
linked to those elements of customer-centric orientation which have attracted the most
attention from marketing researchers.
Developing a conceptual framework to guide organisations in CRM adoption is
increasingly critical for researchers and managers, to help them cope with the multi-
4

disciplinary nature of CRM. While there is a substantial body of literature concerning
CRM and its adoption, research on CRM adoption is widely scattered and fragmented
across different disciplines and perspectives. As a result, the subject of CRM is
notable for the lack of a holistic conceptualisation of the major factors affecting its
adoption within organisations (Frow et al., 2011). Research of what constitutes CRM
adoption within organisations is needed. Therefore, this study comes with empirical
investigation of a comprehensive conceptualisation of the major factors affecting
organisational adoption of CRM.
CRM is perceived as an innovative and an emerging modern marketing strategy
(Goldenberg, 2008). Prior research has either developed a broad interpretation of
CRM adoption which encompasses a variety of factors affecting the adoption of CRM
at an organisational level, or a narrow view of CRM focusing primarily on
individual/staff level. While there is a need for a holistic understanding of the CRM
adoption process at both levels, research integrating both levels of CRM adoption is
scant. This study considers CRM adoption as a multi-stages process (individual and
organisational) with differing influences at each stage. Although the terms adoption
and implementation are similar and used interchangeably, the term implementation
in this study means a widespread usage of CRM within an organisation while
adoption refers to sequential phases of the innovation diffusion process which
mainly includes employees acceptance of CRM and the implementation of CRM
within the organisation.
This study adopts the Innovation Diffusion Theory (IDT), in order to investigate the
adoption process. Moreover, IDT aids the development of a holistic view of CRM as
it considers the adoption process at both individual and organisational levels. The IDT
model, comprehensively developed by Rogers (1962, 1983, and 1995), has been
applied across various disciplines such as anthropology, sociology, education,
communication, marketing, management and geography (Rogers, 1995). According to
Chen et al. (2000), IDT is one of the primary theories applied in technology
innovation. However, to date, it has received minimal coverage amongst CRM
adoption studies. Therefore, this study attempts to bridge this gap in the literature.
1.4 Aims, Objectives and Research Question
The problem motivating this study is why organisations are challenged by CRM
adoption, or have failed to adopt CRM successfully. The overall aim of this study is to
develop a conceptualisation of the major factors affecting organisations adoption of
CRM. CRM adoption will be investigated from marketing, management and
information technology perspectives, reflecting the idea that CRM is a combination of
concepts from these perspectives/disciplines. Hence, more holistic conceptualisation
of the major factors affecting organisations adoption of CRM system is needed in
order to better understand this phenomenon.
This study attempts to extend the body of knowledge in the area of CRM adoption and
to develop insights from various perspectives. Moreover, the findings from this study
5

are intended to enable researchers to understand how the overlaps of these
perspectives are relevant for extending each one of them. The main aim of this study
is to develop a conceptualisation of the major factors affecting organisations adoption
of CRM. In order to achieve this, the study has evolved the following four objectives:
To evaluate extant literature of CRM from the marketing, management and IT
disciplines.
To propose a conceptual research framework for understanding the factors
influencing the adoption of CRM.
To empirically identify factors affecting the organisations adoption of CRM.
To offer insights into CRM adoption and its paradoxes.
Existing CRM studies fail to offer organisations sufficient guidelines for effective
adoption of CRM. Moreover they fail to offer clear conceptual links between
marketing, management and IT disciplines to demonstrate CRM as a joint
development process. This study aims to resolve this dilemma or research problem. In
particular, this study strives to answer the following research question:
What are the factors affecting CRM adoption within organisations?
1.5 Scope of the Study
This study explores a relevant theoretical and managerial issue, that is, which factors
most influence the adoption of CRM by organisations. It seeks to bridge gaps in CRM
theory and practice by developing a holistic view of factors affecting its adoption.
Because CRM is involved with marketing, management and technology disciplines, it
is important that the holistic view in this study is based upon valid prior knowledge
regarding adoption factors across these disciplines, as shown in Figure 1.1.

Figure 1.1: Three Perspectives on CRM


From a marketing perspective, CRM is viewed as a concept concerned with the
essentials of relationship marketing as an effective business philosophy or strategy.
Relationship marketing offers direction on the broad structures for developing an in-
depth understanding of CRM (Mitussis et al., 2006). In turn, CRM pursues the goal of
establishing relationship marketing. The central difference between these two terms is
6

in the application of information technology facilitating effectiveness (Ryals and
Payne, 2001). Accordingly, the relationship marketing field is engaged in this study as
it aids in building a thoughtful understanding of the embedded philosophy of CRM.
According to Day (1999), the customer-centric approach lies in creating liability for
managing customer relationships. Following on from this, Grnroos (2000) states that
relationship marketing builds from a customer-centric approach to enhance customer
loyalty and long-term relationship. The customer-centric orientation is the core of
relationship marketing, as it relies on enhancing customer relationships and loyalty
(Grnroos, 2000). Customer-centric orientation is a resourced and organised strategy
which seeks to satisfy the profitable customer. This ostensibly involves many
elements that are also characteristics of CRM adoption, including customer
segmentation, acquisition, profitability analysis, satisfaction, and retention (Buttle,
2008). These characteristics will be discussed in more details in the second chapter of
the study.
For the most part the CRM management literature, due to its inherent focus on the
customer, views CRM as an essential business strategy and philosophy (Day, 2002).
Therefore, scholars from this field focus on organisational and communication issues
surrounding the development and implementation of business strategy, and the role of
employees and organisations in managing the adoption of CRM. According to Ocker
and Mudambi (2003), CRM adoption involves a substantial restructure of
organisational elements and processes, which often includes a strategic plan for
organisational change, the aim of which is to maximise the value of relationships with
company customers. Overall, researchers from this area propose that the
organisations strategic plan, internal marketing, organisation culture and leadership,
and project management have a strong influence on the successful organisations
adoption of CRM.
These two themes will be discussed later in Chapter two. Since technology can be
seen as a key component of CRM, IT researchers focus accordingly on CRM as a
marketing tool/technology rather than as a philosophy/strategy. Generally, there are
two main themes rising from the IT discipline: CRM alignment with knowledge
management capabilities, and CRM usage and implementation issues. Technology
makes it possible for businesses to capture, manage, and share customer knowledge
(Maklan et al., 2005; Raman et al., 2006). Since gaining customer knowledge is
crucial to attain CRM objectives, it is suggested that CRM is strongly related to the
knowledge management field (Massey et al., 2001).
IT researchers are concerned with CRM usage and acceptance (Schillewaert et al.,
2005; Wu and Wu, 2005). They suggest that the quality of system use and acceptance
has a strong effect on employees adoption of CRM in organisations, referring to the
idea that employees must first accept the CRM system in order to achieve the
marketing goals of their organisations. Technology acceptance is often correlated with
other constructs. Prior research suggests that a technology acceptance model would
7

help businesses and researchers to better understand why people adopt/resist using the
CRM system, to predict how individual users will respond to the CRM, and to
increase their acceptance by improving the CRM implementation process (Tung et al.,
2009). This study suggests using the technology acceptance model (TAM), developed
by Davis (1989) to explain the behaviour of individuals, whereas other factors in the
conceptual model elucidate CRM adoption by organisations. A number of studies
have successfully applied and extended the TAM to examine the acceptance of new
technologies in the CRM domain. The TAM explains IS usage-behaviour, and how
subsequently usage-behaviour is influenced by behavioural intention, which in turn is
influenced by attitude and perceived usefulness of the system. Additionally, attitude
and perceived usefulness are influenced by the perceived ease of use.
1.6 Contribution of the Study
This study offers a number of theoretical and practical contributions. First and
foremost, it offers insights into CRM adoption and its paradoxes for both academics
and practitioners. By developing a holistic view of factors affecting CRM adoption,
this study contributes to key debates surrounding the rationale and consequences of
CRM adoption. It also highlights key areas of poorly implemented practices and some
under-researched areas of CRM adoption.
The most important theoretical contribution of the study lies in developing a holistic
conceptualisation of the major factors affecting CRM adoption by organisations. To
date there has been a scarcity of such holistic views portraying how a wide variety of
relevant areas/concepts integrate with the CRM adoption process. Thus, providing a
big-picture conceptual framework stands to bridge gaps in understanding and to
provide deeper insights into CRM as a modern marketing paradigm which can be
translated into multidimensional concepts. The underlying principle of the
multidimensional view, suggested in this study, is that CRM obliges organisations to
keep abreast of technology, managerial concepts, and to adopt a way of thinking
which focuses on the customer. Undertaking such a view requires incorporating the
disciplines of marketing, management and information technology into the CRM
concept. Accordingly, this study builds on research from these disciplines to develop
a holistic perspective on CRM, making a number of contributions to these three
disciplines. Such multi-disciplinary integration unravels the complexity of CRM and
advances theoretical knowledge of its meaning.
Academic as well as practical contributions are expected as in todays competitive
environment if businesses are to improve their performance. This conceptual
framework is intended to shed new light on potential management processes and
practices which managers may use to consider the complexity of CRM, providing
them with a tool with which to exploit the potential of CRM. This is vital since
businesses are challenged by the difficulty of adopting CRM in ways which help them
yield its potential benefits. This study advances businesses understanding of the CRM
adoption process by offering a comprehensive hierarchical approach: the adoption
8

process starts with the individual level of adoption of CRM strategies as something
accepted and valued by employees, towards the organisational level of adoption, as a
strategy implemented by an organisation. This approach pays attention to the
important role of employees perceptions as a critical mediator between organisational
efforts to adopt CRM and the actual CRM implementation within an organisation. In
conclusion, the conceptual framework in this study encourages businesses to consider
and undertake a number of different initiatives which have emerged as relevant to
CRM, if they wish to boost the adoption of CRM at both levels.
1.7 Jordan as a Research Context
The empirical investigation for this study is carried out with organisations situated in
Jordan. Jordan has been selected as the locus for the sample of this study because: i)
businesses in Jordan are known to adopt and implement highly sophisticated
technologies and CRM applications, and ii) the author, being a Jordanian citizen, has
ready access to data there.
Given that the study fieldwork is carried out in Jordan, some information about the
economy of Jordan and compositions of its business networks is presented in this
section. Jordan is located in the heart of the Middle East. It is considered one of the
major countries contributing to the economic and political stability in the area.
Geographically, it is within easy access of both of Europe and Africa continents.
Because of its liberal economic policy, Jordan represents a model of developing
countries, in that it is witnessing a rapid development in its economy (CBJ-Annual
Report, 2003; Naser et al., 1999). The GDP of Jordan was $37.37 billion in 2011
(annual growth is about 2.5%). Over the last decade, Jordans economic growth has
been driven by the performance of the services sector (64.7% of GDP). This may
explain why it was chosen by the World Economic Forum (WEF) in 2003 as a pilot
country to provide a convenient benchmark for development in the region (WEF,
2003).
Jordan joined the World Trade Organisation (WTO) in 2000; in this year it also
signed an association agreement with the European Union, a trade agreement with the
United States, and joined the Arab free trade Agreement. These trade relations have
granted Jordan beneficial access to various international markets, and gradually are
paving the way for liberalisation and enhancing private investments in the country.
This has caused the international community to be very responsive, and thus enabled
Jordan to derive many of the benefits of a globalising world (Al-Jaghoub and
Westrup, 2003). Consequently, the local technological capacity there has improved
with the aspiration of transforming Jordan into a leading country in the area of
information and communications technologies (ICT) in the Middle East. The rapid
growth of ICT usage and development has made Jordan a competitive state in the
area. This has facilitated the penetration of information technology into different
sectors in the country.
9

Compared to other Middle Eastern and African countries, Jordan is currently in a
superior situation in regard to accessibility to internet services and information
technology (Aladwani, 2003). The development in information technology has grown
rapidly, with a total number of internet users increasing from 127,300 in 2000 to
1,980,400 in 2011. The penetration rate growth of 1450% (Internet World Stats, 2012)
means that around one third of the population uses the internet. In light of the recent
development of ICT in Jordan, CRM is becoming one of the strategies considered by
businesses for enhancement of customer relationships. Hence, conducting this study
in the Jordanian context is valuable, as organisations there have recognised the
advantages of adopting CRM and utilising the information technology in conducting
their business.
The economy of Jordan is dominated by the services sector (around two thirds of its
GDP). The services sector there is well advanced and generally adheres to the highest
standards by benchmarking international best practices (European Union, 2011). The
ability to derive many of the benefits of the globalising world facilitates the
penetration of information technology to the service sectors in the country (Al-
Jaghoub and Westrup, 2003).
The banking sector is a major player in the services sector. The dynamic and liberal
financial system in Jordan has resulted in this sector, being the fastest growing in
Jordan; the number of private banks rose from 21 banks in 2000 to 25 banks by the
end of 2010. Of the total, 16 are domestic, and nine are subsidiaries of foreign banks
(six of them Arabic banks). The approximate number of bank branches is 619
branches (Association of Banks in Jordan, 2010). The telecommunication sector in
Jordan has tremendously grown to become a very advanced and immensely
competitive market; the mobile phone penetration rate is 120% of the population. This
sector is dominated by four telecommunication firms: Zain, Orange, Umniah, and
Express telecoms. These are private firms which are mainly owned by foreign
corporations. The hospitality sector is rapidly developing with more than 470 hotels of
which 21 are five-star hotels (Jordan Economic and Commerce Bureau, 2009).
In order to succeed or survive in this competitive environment, businesses from all
sectors in Jordan realise the necessity of providing excellent service quality to
customers. Consequently, several up-to-date technologies have been incorporated into
the services they provide (Jordan Economic and Commerce Bureau, 2009;
Association of Banks in Jordan, 2010). All of this has enhanced Jordans experience
with CRM adoption. In conclusion, CRM is one of the strategies used by Jordanian
organisations to improve relationships with customers. Hence, the empirical
investigation of this study will be carried out with firms in Jordan, especially since the
author has access to data in that country.

10

1.8 Thesis Structure
After the introduction, this thesis starts with an extensive review of literature in order
to develop a conceptual framework of the relevant factors affecting CRM adoption
within organisations, and to inform the interview design. It proceeds with an
exploratory study of data derived from nine individual interviews with varied
stakeholders involved with CRM in their organisations. The exploratory study aims to
investigate the subjective perceptions and experiences of a variety of marketing
managers, CIOs, and employees working with CRM. This qualitative part of the thesis
serves to ensure that the proposed conceptual framework is efficient in tackling
significant aspects relevant of the study. The second study in this thesis is
quantitative, and aims empirically to test the proposed conceptual framework across a
wider sample of population. Hence, the quantitative study is designed to offer further
breadth and generalisation to the results. Results of the quantitative study are found
using two main statistical techniques: exploratory factor analysis, and structured
equation modelling. Finally, the significant findings, implications and limitations for
practitioners and academics seeking to extend their knowledge of ways to adopt CRM
are presented.
This thesis is organised into eight main chapters, the contents of which are briefly
described as follows:
Chapter 2: Literature Review on CRM and its Adoption
This chapter is composed of five sections. Firstly, it reviews the current literature of
CRM and represents relationship marketing as the root of CRM. Following that, it
elucidates a broader understanding about what constitutes CRM. The subsequent
sections develop a conceptualisation of the major factors affecting organisations
adoption of CRM. Extant empirical research is examined from different perspectives
related to marketing, management, and IT disciplines. A conceptual research
framework is proposed in this chapter, based on incorporating key success factors that
include the customer-centric orientation of organisations, use of strategic plan,
internal marketing, organisation culture and leadership, project management,
knowledge management, and innovation essentials.
Chapter 3: Research Methodology
This chapter describes the research design and methodology used in this study.
Different research philosophies are discussed and the authors philosophical
standpoint is acknowledged. Then, discussion is carried on and around the research
strategy, research methods, sampling and recruitment, data analysis and ethical
considerations. Moreover, this chapter elaborates the details of sampling procedures
and developing research framework steps/stages.
Chapter 4: The Conceptual Framework
This chapter presents the results of in-depth interviews with individuals, as the first
study in this research. Building on the results of the interviews in combination with
11

insights from the present literature, this chapter aims to present the conceptual
framework of this study. It starts by explaining the purpose of employing exploratory
individual interviews in the study. Furthermore, the sample selection process and
respondent characteristics are described. Interviews results are based on a two-step
data analysis: within-case analysis, and cross-case analysis. The combination of
interview results and reviewed literature are used to develop research hypotheses.
Based on the results of this exploratory study, the proposed conceptual framework of
Chapter 5: Research Model and Scale Development
This chapter summarises the stages used to develop the research model and scale
items. First, the literature of CRM and CRM adoption is reviewed to explore and
develop key themes. These themes are then discussed and confirmed in interviews
with practitioners dealing with CRM in Jordan. Then, the results of the interviews, in
combination with the reviewed literature, are used to design a survey instrument.
Finally, the quantitative data are analysed using appropriate methods.
Chapter 6: Data Analysis and Findings
This chapter presents the results of the quantitative study and tests hypotheses
developed in the prior qualitative findings chapter. It discusses the research
framework development process alongside the statistical techniques used to analyse
quantitative data. First, it starts by describing the characteristics of the sample. Then,
it discusses the different statistical techniques which can be used to serve the research
question in this study. This is followed by the analysis strategy used in this study.
First, Exploratory Factor Analysis (EFA) is employed to summarise the scale items,
then a two-stage structural model is used to evaluate the proposed conceptual model.
The first stage involves using Confirmatory Factor Analysis (CFA) on measurement
models to confirm or reject the proposed model. Reliability and validity tests of the
measurement model are verified during this stage. The second stage involves using
structured equation modelling (SEM) on structural models to evaluate the
hypothesised relationships that predict CRM adoption. This chapter represents the
findings of this thesis in a conceptual model of CRM adoption. Finally, Analysis of
Variances (ANOVA) is utilised to determine which kinds of organisational
characteristics might determine how CRM is adopted by the organisation.
Chapter 7: Discussion of Results
This chapter interprets the findings of this thesis, and offers insights into the nature of
CRM and its adoption within organisations. It first discusses the conceptual model
development process. Then, possible explanations and critical arguments in
accordance with prior research are provided to respond to research findings. The
findings are beneficial to both practice and theory as they identify gaps between what
is known from prior research and knowledge synthesis, and actual organisational
implementation of such knowledge.
12

Chapter 8: Conclusions, Implications and Further Research
This chapter summarises and links the findings of the study to the research objectives,
and then goes on to represent the overall conclusions of the study. A number of
theoretical and managerial contributions are drawn to illustrate the significance of the
study. Besides this, some limitations and key areas for future research are
acknowledged and discussed.


13

Chapter 2: Literature Review on CRM and its Adoption
2.1 Introduction
Following on from the research question investigation factors affecting organisational
adoption of CRM, this chapter elucidates a theoretical foundation relating to CRM
and its adoption by organisations. It is composed of six main sections. Firstly, the
chapter represents relationship marketing, the root of CRM. Secondly, a review of
what constitutes CRM, and its types, marketplace, and vendors is represented. By
building on extant work in the field, the literature review of this study is an attempt to
build on the cumulative studies from marketing, management and IT disciplines.
Accordingly, an extensive review of the literature in each discipline is respectively
conducted in sections four, five and six. Next, a summary of the main factors affecting
CRM adoption is extracted from the literature of the three main disciplines
In this study, the literature review is used to meet the following objectives:
1. Gaining an understanding of the existing theories and models in the field of
CRM and CRM adoption.
2. Seeking evidence that may lend support to the proposed conceptual model.
3. Developing a baseline conceptual model that is used to identify the key factors
that may affect an organisations adoption of CRM.
4. Establishing a conceptual framework for designing in-depth interviews
appropriate to the research.
5. Analysing qualitative data, using within-case and cross-case analysis.
6. Identifying a preliminary set of observed variables for each of the unobserved
variables in this study.
2.2 Relationship Marketing (RM) and Customer Relationship
Management (CRM)
2.2.1 What is Relationship Marketing?
Changes in the concept and practice of marketing over the last decade have
fundamentally reshaped the field. Although the concept of marketing mix has retained
its place as a dominant marketing paradigm, modern research has demonstrated that
on its own it is inadequate as a theoretical model for many industries, and this has
necessitated the emergence of another marketing paradigm (Grnroos, 1994).
The concept of relationship marketing has been suggested as one of the most useful
emergent paradigms for the future of marketing (Berry et al., 1983; Grnroos, 1989;
Peppers and Roger, 1995). According to Kotler (1999:450), marketing is moving
away from a focus on individual transactions and towards a focus on building value-
laden relationships and marketing networks. This argument is apparent in todays
business environment, since changing pressures on industries, from market,
technology and society, have altered how businesses compete in todays new
economy. Hence businesses, in essence, must move from a product-oriented and
14

transaction-oriented approach towards a longer-term relationship-oriented approach,
and accordingly must adapt their marketing strategies in order to sustain competitive
advantage, and maintain a place in target markets (Baker, 2003).
Relationship marketing is not a recent concept; marketers have consistently promoted
a close relationship to customers. This is reflected in marketing literature, where
understanding customers values and delivering their needs has been demonstrated as
significant for successful businesses. Sheth and Parvatiyar (2002) suggest that
relationship marketing had a place even at developmental stages of marketing theories
in regard to consumer behaviour. Additionally, Jacoby and Kyner (1973:2 as cited in
Parvatiyar and Sheth, 2001) argue that Brand loyalty is essentially a relational
phenomenon, that is, that some relationship marketing fundamentals have been
facilitated by brand loyalty. Thus relationship marketing has strong antecedents in
marketing literature and theory; what is new now is that the advance of technology
has altered the forms and practices of relationship marketing.
The origins of relationship marketing were born out of ancient trading practice. But in
the modern world, it has re-emerged as one of the dominant paradigm of marketing.
In the literature, it is generally agreed that the term "relationship marketing" was first
used by Berry (1983), to describe a longer term approach to marketing in a service
context. According to Berry (1983:66), relationship marketing is useful in attracting,
maintaining and -in multi-service organisations- enhancing customer relationships.
Since its early evolution, several other terms, mainly derived from service and
industrial fields, have been used to refine the concept of relationship marketing, such
as relationship management, database marketing, interactive marketing and one-to-
one marketing.
Relationship marketing (RM) and CRM are often used interchangeably, which
sometimes can cause confusion about their meanings. Although, both concepts are
closely related in the sense that they are based on the idea of building relationships
with customers, there are some important differences between the RM and CRM. Sin
et al. (2005) delineate three key differences between the RM and CRM. First, they
explain that RM offers a strategic approach whilst CRM is often related to a more
tactical approach. Moreover, they suggest that RM should focus on emotional and
behavioural elements such as attachment and empathy, and CRM should focus on
managerial elements related to building and maintaining relationships with customers.
Finally, they argue that RM is broader in its capacity to embrace relationship building
with all stakeholders including suppliers and employees, and CRM is more exclusive
in building relationships with profitable customers.
Following the extensive review of the development of the RM and CRM literature, it
is suggested that RM provides guidance on the broad structures for developing an in-
depth understanding of CRM (Mitussis et al., 2006). CRM in turn aims to achieve the
objective of establishing RM. Ryals and Pyane (2001) indicate that the main
differentiation between RM and CRM is that CRM is often concerned with using
15

information technology in implementing relationship marketing strategies. To
understand issues underpinned by diverse interpretations of CRM and provide a
holistic view of CRM meanings, it is essential to focus on relationship marketing
literature as the root discipline to CRM. Accordingly, the relationship marketing
concept is engaged in this study in order to elucidate the embedded philosophy of
CRM.
2.2.2 Relationship Marketing Schools
In order to identify the key elements of relationship marketing (RM), the extant
studies of leading schools of RM will now be reviewed. Several studies have
deepened and broadened the understanding of RM from within a variety of
geographical regions, disciplines, and contexts (see Figure 2.1). Studies have
developed independently and simultaneously within Scandinavian countries, the USA,
Australia and the UK. Such studies have drawn on theories from a wide variety of
disciplines including marketing, management, sociology and psychology.
Furthermore, RM has been applied within a diverse range of contexts including
services marketing, business-to-business manufacturing, and Fast Moving Consumer
packaged Goods FMCG (Harwood et al., 2008). The relationship marketing concepts
derived from such studies have developed to reflect different perspectives,
incorporating differing areas of precise focus. One approach to relationship marketing
integrating quality, customer services, marketing, and logistics can be observed in the
works of Christopher et al. (1991) and Crosby et al. (1987). Another approach, to be
found in the works of Vardarajan and Cunningham (1995), Heide (1994), and Morgan
and Hunt (1994), focuses on partnering relationships and alliances as a type of
relationship marketing. Yet again, other studies of relationship marketing have
focused on relationship-oriented strategies (Schultz et al., 1992), and on customer
motivations for engaging in relationship marketing (Sheth and Parvatiyar, 1995).

Figure 2.1: Perspectives of Relationship Marketing

Source: Harwood et al. (2008:15)
16

It has been generally accepted that there are three distinct schools or approaches of
thought on relationship marketing: the Anglo-Australian school (also known as the
Cranfield School), the North American school, and the Nordic and industrial or
international marketing and purchasing group (IMP) school. These three schools have
evolved separately and simultaneously with their distinctive concepts and empirical
findings. Although they share several perspectives, they have differed somewhat in
focus. The Anglo-Australian school, influentially represented by leading researchers
such as Christopher et al. (1991), has typically integrated quality, customer service
and marketing, and customer relationship economics. Although this cluster of
researchers is dispersed throughout the UK and Australia, their common background
is the Cranfield School of Management. The North American school on the other
hand, representing the work of Berry (1983), Levitt (1983), Jackson (1985), and
Kotler and Armstrong (2008), has laid emphasis on the dyadic relationship between
the buyer and the seller. Most American school researchers have suggested that the
marketing mix concept has not been replaced by, but repositioned within relationship
marketing, which enables organisations to understand and respond to customer needs.
Finally, the Nordic school, developed in Northern Europe over the last three decades,
is based on the interactive network theory of industrial marketing and services
marketing concepts. Grnroos (1989) and Gummesson (1987) are vigorous and
influential researchers from this school, particularly from the services marketing
perspective. IMP, co-founded by Hkansson (1982) and Ford (1990), is a research
group from Scandinavian countries that has focused on understanding organisational
relationships in business-to-business (B2B) markets.
The Nordic School
Grnroos and Gummesson in representing the Nordic school, are influential in their
critical assessment of marketing paradigms. Grnroos (1995) criticises the
transactional nature of the marketing mix derived from microeconomic theories, and
claims that the marketing paradigm has shifted from the marketing mix to relationship
marketing. He states (1996:11) that Relationship marketing is to identify and
establish, maintain, and enhance relationships with customers and other stakeholders,
at a profit, so that the objectives of all parties involved are met; and that this is done
by a mutual exchange and fulfilment of promises. According to Grnroos (1981),
effective marketing and delivery of services prompt organisations to practice internal
marketing and engage them into developing relationships with customers across all
departments. On the other hand, Gummesson (2008:5) discusses marketing as a cross
functional process no longer merely confined to organisational function, and defines
relationship marketing as interaction in networks of relationships. Additionally, he
argues that relationship marketing core concepts include relationships, networks and
interactions. Such relationships require at least two parties who contact each other,
such as the dyadic relationship between a supplier and a customer. He describes the
network as a set of relationships which can be developed into tremendously complex
patterns, operating within the interaction that is established when parties have active
contact with each other. Gummesson (2008) suggests that relationship marketing is a
17

new emerging marketing concept and CRM is a technique that handles relationship
marketing in practice.
The Nordic school is mainly characterised by its structured approach towards
relationship marketing, and its shift in focus from traditional marketing concepts
(Ganguli et al., 2008). It has emphasised that services management is the core of
relationship marketing, which should be approached from a managerial perspective
highlighting the necessity to practice internal marketing and involve the whole
organisation in developing a relationship-orientation strategy (Palmer et al., 2005;
Peck, 1995). According to this school, there is a strategic need to look internally at
employees as well as externally at customers, and to prioritise internal marketing as a
reflection of organisational structure, processes, and culture (Grnroos, 1981). Further
explicating the underlying premise of the Nordic school, scholars from this school
have focused on long-term relational exchange aspects in industrial and services
marketing, including concepts such as quality, customer commitment, and customer
retention (Rao, 2002; Shammout, 2007). According to Grnroos (1981), relationship
marketing is also supported by building networks, strategic alliances, and
relationship-oriented marketing communications. Gummesson (2008) identified 30
varied types of relationships in a given market, counting relationships with customers,
competitors, employees, supply chain, etc. These relationships are seen to derive from
three central processes: the interaction, the dialogue, and value process (Bush et al.,
2007). While such ideas offered by the Nordic school have been influential, it could
also be argued that these ideas are limited in that the school revolves its approach
around service, as the exclusive factor in building relationships (Ganguli et al., 2008).
This approach has its limitation in that it does not explain the linkages between
relationship marketing and other sectors where consumers may value relationships.
The Anglo-Australian School
An integrative approach, undertaken by Australian and British scholars working
together in a research group based at Cranfield University, has become widely known
as the Anglo-Australian school (Egan, 2008). This school is based on the work of
Christopher, Payne and Ballantyne, who consider traditional marketing as being built
on quality and service, which together increase the value offered to customers of
enduring relationships with the organisation (Palmer et al., 2005; Ivankovi, 2008).
This school considers marketing as a cross-functional process (Lindgreen et al.,
2006). It takes a holistic approach to relationship marketing which embodies the
integration of quality management, services marketing concepts and customer
relationships economics (Christopher et al., 2002). The Anglo-Australian school is
characterised by what is known as the six markets model (Christopher et al., 2001;
Payne, 2006). This model seeks to accommodate the growing complexity of industrial
markets, and addresses relationship marketing at the organisational level in order to
build and sustain real customers value. In this model the principles of relationship
marketing are extended to a range of diverse markets surrounding the customer
markets. These are internal, supplier/alliance, recruitment, influence, and referral
18

markets. This model shows that delivering superior value to customers is based on
building and nurturing relationships among these six markets. Payne (2006)
emphasises the critical role of information technology in implementing relationship
marketing within organisations.
The North American School
In addition to the ideas promoted by the two schools mentioned above, the North
American school (Berry, 1983; Perrien et al., 1993) has focused on consumer
transactions. It identified transactions as a central unit used in assessing marketing
activity up until the early 1980s (Webster, 1992; Palmer et al., 2005). This school
considers relationship marketing as a generally under-developed concept or
phenomenon (Egan, 2008). Accordingly, it highlights the importance of organisations
handling and integrating a portfolio of transactional and relational strategies within
one hybrid model. In the view of this school, organisations are expected to understand
that different customers have different profitability levels; related to this is an
understanding that there should be available a variety of alternative marketing styles
in order to ensure the appropriate amount of money and other resources that should be
allotted between the priorities of retaining and attracting of customers. In this respect,
they see relationship marketing as a strategy especially tailored for the best customers,
that is, who are profitable, committed and loyal to the organisation. This viewpoint, in
arguing that relationship marketing should be part of marketings modern dominant
logic (Egan, 2004), has been generally accepted as the latest approach to relationship
marketing, not the least of which is that it emphasises the critical role of information
technology in the maintenance of relationships (Rao, 2002).
Similarities and Differences between Schools
As can be seen from the above discussion, RM is a diverse field with no single best
definition. The Nordic school has made a significant contribution to relationship
marketing literature in the field of services marketing and interactive network theory.
Widely cited in relationship marketing literature, it is generally held that Nordic
school contributions are unique.
Overall, in the literature there is a high level of agreement that a changing perspective
on relationship marketing has played a significant role in ongoing dramatic changes in
marketing. Furthermore, researchers from different schools agree that customer
retention is the basis of relationship marketing in all schools (Rosenberg and Czepiel,
1984 as cited in Choudhary, 2010). However, there exists still some debate as to
whether the marketing mix should be modified to inform relationships in certain
industries such as the service industry, or whether the marketing mix is no longer
practical for businesses which should now focus more exclusively on relationships. A
review of the literature shows that there are several perspectives on relationship
marketing from different schools. As the debate as to what constitutes RM continues
to resonate among academics, some attempts have been made to integrate existing
bodies of work in order to provide something more comprehensive. Palmer et al.
19

(2006) have tabulated the key traits of each School to highlight their differences, as
shown in Table 2.1.
Table 2.1 Comparison of Main Components of Major Schools of Relationship
Marketing
Key
component
Transaction
Marketing
Anglo-Australian
school
Nordic School IMP Group
Basis Exchange and the
4Ps
Service/ quality
/marketing
Service Relationship
between firms
Time frame Short-term Long-term Long-term Short and long
term
Market Single customer Six markets 30 markets with
four categories
Multiple, network
Organisation Hierarchical and
functional
Cross functional
process based
Functional and
cross functional
N/A
Basis of
exchange
Price Perceived value Less sensitive to
price
Product/service,
information,
financial, and
social
Product/quality
dimension
Product/technical
/output quality
Function of value
and cost of
ownership
Interaction
quality
Technological
Measurement Revenue and
market share
Customer
satisfaction
Quality, value,
customer
satisfaction
Customer
profitability
Customer
information
Ad hoc Customer value
and retention
Individual Varies by
relationship stage
Internal
marketing
NA Integral to the
concept
Substantial
strategic
importance
N/A
Service Augmentation to
core product
Basis for
differentiation
Integral to
product
Close seller-buyer
relations
Source: Palmer et al. (2005:322)
As can be seen in this table, the Nordic school highlights the long-term relational
aspect of service marketing. To emphasise the relational nature of this form of
marketing, they use relative terms such as interactive marketing, quality and
relationships, overall representing a network approach to relationship issues within the
service industry. This approach prompts organisations to look strategically at internal
marketing with a view to promoting more effective service to customers and
eventually to building relationships. A similar perspective is emphasised by the IMP,
with the difference that IMP stems from work conducted in business-to-business
contexts where there is a small number of buyers and sellers but where transaction
values are great and, therefore, significant. The IMP school emphasises that a buyer-
seller relationship develops from a series of interactions in which adoption is closely
linked to the process of building relationships. Thus, relationships are viewed as an
outcome of a series of interactions, with emphasis placed on the role played by the
20

buyer. Because of the importance of the process as well as the outcome in this series
of interactions, IMP scholars highlight the potential value of developing relationships
between suppliers and buyers. In contrast to this, the Anglo-Australian school focuses
on delivering superior value both to customers and to shareholders. Hence, their
position is that relationship marketing should be handled from a strategic approach in
order holistically to integrate aspects of service marketing, customer relationship
economics and quality management. On the other hand, the North American school
adopts a different perspective by emphasising the dyadic nature of transactions
between buyers and sellers. A review of the literature demonstrates that the North
American school positions relationship marketing as a general philosophy and a
phenomenon rather than a unified developed concept (Egan, 2008). In contrast, the
Nordic and IMP schools view relationship marketing, networks, and service as
representing a new foundation for marketing (Gummesson, 2008). Apart from
aligning itself with the IMPs view that greater emphasis should be placed on
achieving marketing paradigm shift, the Nordic school takes an approach to
relationship marketing which brings it closer to the American and Anglo-Australian
school position (Parvatiyar and Sheth, 1999), which is that customer relationship
management should incorporate quality management tools such as CRM (Shammout,
2007).
In sum, although there is some overlap of views, there is no consensus among
scholars as to what constitutes the most important elements of relationship marketing.
Different backgrounds reflect different views which have developed around
relationship marketing as a concept. This study aims to develop a holistic view of
CRM, and in doing so attempts to consider the full spectrum of thought emerging
from different RM theorists, such as those related to internal marketing (Nordic
school), increasing value delivered to customers (Australian school), and use of
transactional and relational strategies for serving best customers (American school).
2.2.3 The Role of IT in Relationship Marketing
Information technology affects marketing concepts in many ways, as it changes the
marketing landscape and challenges marketing strategies. Specifically, the revolution
of the internet and other technologies has had a dramatic impact on the marketing
paradigm and on consumer behaviours (Kotler and Armstrong, 2008). The technology
revolution, from its beginnings in 1970, has provided marketers with many benefits,
including access to and use of customer information, call centres, automated sales
forces, enhanced analytical capabilities, and sophisticated decision support systems.
IT offers several distinct benefits to both customers and the businesses that serve them
(Kotler, 1992). On one hand, it provides customers with flexibility, a wider selection
of products, and comparative information about companies, products and competitors
prices (Doyle and Stern, 2006; Baker and Hart, 2007). On the other hand, IT helps
businesses to build customer relationships, to communicate with customers, to reduce
costs and increase efficiency; it also gives marketing and management function access
21

to new markets and customers, and helps them to maintain flexibility (Baker and Hart,
2007; Kotler and Armstrong, 2008; Chaffey, 2009). It is clear that technology
drastically changes how businesses may deliver value for the customer and build
customer relationships. It not only creates new and more efficient global distribution
and media channelling for businesses, but also changes customer or consumer
behaviour; customers have become more sophisticated with the wide selection of
choices and thus less responsive to mass-customised advertising media. Overall, IT is
shifting the balance of power to the customer, so that businesses now need to think
fast and to adapt to dynamic changes in customer needs, in order to create competitive
advantage (Payne, 2006).
The recent explosion of information technology facilitates or at least supports
relationship marketing (Lin et al., 2010). The significant value of relationship
marketing, which provides organisations with competitive advantage, drives attempts
to implement relationship marketing in mass consumer markets. Small organisations
with few customers have always to some extent found it easy to collect information
and build relationships. For large organisations with mass consumer markets however,
mapping customer relationships without the support of information technology has
been virtually impossible. For these organisations information technology enhances
opportunities for using information or data to build, manage, and sustain long term
relationship with customers (Payne et al., 2006). As a result, the focus within
marketing evolves from relationship marketing to the customer relationship
management.
2.3 Customer Relationship Management (CRM)
2.3.1 What is CRM?
According to marketing research leaders, customer relationship is one of the emerging
paradigms of modern marketing, as it delivers the essence of marketing concept
(Berry et al., 1983; Webster, 2002; Gummesson, 2008). As a paradigm of relationship
marketing, CRM is an overall process of building and maintaining profitable
customer relationships by delivering superior customer value and satisfaction (Kotler
and Armstrong, 2008:16). Alternatively, information technology plays a significant
role in the CRM function of building customer relationships; because of its one-to-one
and interactive marketing nature, IT is particularly useful for enabling businesses to
collect information about customers and increase their satisfaction through the
development of tailored products and services. As a paradigm, Hughes (2006) notes
that the literature on CRM is sparse in different areas. This in turn has led to
confusion about what exactly CRM is. While many scholars use the term CRM, there
still remains need to resolve the uncertainty among academics and scholars as to what
constitutes this concept (Maklan and Knox, 2009).
CRM has evolved from technological advances and organisational changes in
customer-centric oriented processes (Jayachandran et al., 2005). This suggests that
CRM adoption issues are not just technical, but encompass a wide variety of factors
22

arising from the marketing and management disciplines as well as IT disciplines.
Theory from these three disciplines, and areas relating to their interrelationships in the
way they support each other, remains under-developed. Drawing on the CRM
literature from marketing, information technology and management perspectives, the
author seeks to bridge the gap surrounding CRM meaning and to develop an
integrated and balanced approach to theories from these three perspectives, as shown
in Figure 2.2. Consequently, a conceptual framework of the critical factors affecting
organisational adoption of CRM is used as means of visualising an integration of
these three perspectives.
Figure 2.2: Three Perspectives on CRM


Extensive reviews of the literature regarding factors affecting organisational adoption
of CRM from those three perspectives are represented in sections: 2.4, 2.5 and 2.6.
Given that CRM uses information technology to help organisations acquire and retain
their potential customers, it is evident that this would be best optimised by cross-
functional engagement and development across departments on the part of marketing
and technical personnel. CRM is becoming more complex especially in that it requires
the use of sophisticated technologies to serve varied stakeholders including customers,
employees, marketers and senior managers. This CRM complexity leads to
differences amongst stakeholders as to tactical emphasis and a lack of agreement on
the precise definition of CRM (Pedron and Caldeira, 2011). In fact, researchers
suggest that organisational failure to adhere to a single set of CRM principles had led
to a high rate of CRM project failure (Buttle, 2004). The definitions of CRM used by
authors and scholars vary greatly. At one extreme researchers state that CRM is a
technology solution and an IT subfield (Romano and Fjermestad, 2001; Shaw et al.,
2001; Goldenberg, 2002), while other researchers claim that CRM is a business
subfield and a tool for more customer-centric marketing (Parvatiyar and Sheth, 2001;
Christopher et al., 2002; Baker, 2003). In the literature CRM is used by most
researchers to refer to customer relationship management (Christopher et al., 2002;
Egan, 2008). Some researchers however use CRM to include customer relationship
marketing, relationship marketing, database marketing, and customer management
23

(Buttle, 2004; Chaffey and Smith, 2008). However defined, the least said of CRM is
that it is clearly a technology solution to a business practice focused on customers.
Nevertheless, Chaffey and Smith (2008) state that CRM is not only about the
technology or the process of delivering value, but essentially, a complete customer
culture.
Over the last two decades, CRM has increasingly been a focal point of research within
the business and IT disciplines, with considerable overlap between the two fields,
although at the same time reflecting distinct differences in focus. From the perspective
of business literature, CRM is linked to marketing and management functions and
reflects the development of marketing strategies that focus on customers. Researchers
in the business field have focused on business strategy (eg: Payne, 2006), relationship
marketing (eg: Gummesson, 2008), and customer-centric orientation (eg: Reintarz et
al., 2004). Their position is that CRM implementation needs the essential of
relationship marketing in order to be accepted as a customer strategy across all levels
of organisation (eg: Goodhue et al., 2002). IT research literature, conversely, has
focused on software application, use, design, implementation, and support. It
investigates the most efficient uses of technology in achieving value for businesses
and looks for the critical success factors involved in technology implementation and
use (eg: Romano and Fjermestad, 2003; Buttle, 2004). Figure 2.3 represents the
similarities and differences in business and IT discipline and their contribution to the
CRM field.
Figure 2.3: A Continuum of CRM Views

Source: Payne and Frow (2005:168)
The literatures of relationship marketing and technology adoption have both made a
significant contribution to the theoretical base of the CRM research. Many researchers
have suggested viewing CRM as a technique that handles relationship marketing in
practice (Buttle, 2004; Doherty and Lockett, 2007). According to Christopher et al.
(2002), CRM builds on the foundation of relationship marketing by using technology
to enable businesses better to position profitable segments and to implement
relationship marketing strategies. Figure 2.4 explains the correlation between
relationship marketing terms, CRM, and customer management. Researchers have
suggested that a definition of CRM should involve a reflective synthesis of businesss
24

strategic vision along with the utilisation of information technology and software
applications, in order to ensure successful implementation (Payne, 2006; Buttle,
2008).
Figure 2.4: Relationship Marketing and CRM- a Hierarchy


Source: Christopher et al. (2002:1)

In the literature CRM has been classified into each of the following subcategories:
CRM, IT, marketing, service/support, and sales (Nagi, 2005). Since CRM is not
restricted to any one discipline, a lack of agreement on its precise definition has
persisted. Researchers have defined CRM in different ways (Pedron and Caldeira,
2011), such as being:
a core business strategy that integrates internal processes and functions with
external networks, to create and deliver value to targeted customers at a profit.
It is grounded on high-quality customer data and enabled by IT (Buttle,
2004:34).
a strategic approach concerned with creating improved shareholder value
through the development of appropriate relationships with key customers and
customer segments. CRM unites the potential of IT and relationship marketing
strategies to deliver profitable, long-term relationships. Importantly, CRM
provides enhanced opportunities to use data and information, both to
understand customers and to better implement relationship marketing
strategies. This requires a cross-functional integration of people, operations,
processes and marketing capabilities that is enabled through information
technology and applications (Payne, 2006:22).
a comprehensive set of processes and technologies for managing the
relationships with potential and current customers and business partners across
marketing, sales, and service regardless of the communication channel
(Greenberg, 2002:16).
25

the values and strategies of RM- with special emphasis on the relationship
between a customer and a supplier turned into practical application and
dependent on both human action and information technology (Gummesson,
2008:7).
The lack of apparent consensus on single universally accepted definition of CRM
reflects a tendency for practitioners and researchers to approach CRM according to
their beliefs about the correct level of CRM application (Reintarz et al., 2004; Nguyen
and Mutum, 2012). Given the many differing definitions of the concept,
conceptualisation of what constitutes CRM is difficult to achieve. However, there are
two ways of looking at this variety of definitions: either as a source of confusion for
researchers and practitioners, or as a reflection of the multi-faceted nature of CRM
schemes which allow a flexible and adaptive approach to application (Nguyen and
Mutum, 2012). Gummesson (2008) for example, whose definition of CRM reflects his
established approach to RM in the Nordic School, as mentioned in section 3.2.2,
argues that RM is an interaction in a network of relationships, while Greenbery (2002)
considers CRM as an integrative process that use technology to collect and analyse
data across the organisation. This view is supported by recent studies, such as Ernst et
al. (2011).
Parvatiyar and Sheth (2001), while recognising that it is difficult when CRM is not
restricted to one discipline, have emphasised the significant need to develop a
definition that encompasses all aspects of CRM, in order to manage and ensure its
successful adoption across the board. Many have suggested viewing CRM as a
technique that handles relationship marketing in practice and hence as a fundamental
concept that links business and IT disciplines (Doherty and Lockett, 2007). In the
literature, all CRM definitions have highlighted IT as an essential component to
achieve and deliver CRM goals, with relationship marketing as its underlying
foundation. Within the Anglo-Australian school of RM, which highlights the
significant role of CRM into facilitating RM, Payne is a vigorous influence; in his
attempt with Frow (2005) to develop a convergence of different aspects, he used a
continuum, as shown in Figure 2.3, to depict CRM as functional from a narrow and
tactical technology to a broad, holistic strategy. Payne (2006:22) defines CRM as
following:
CRM is a strategic approach concerned with creating improved
shareholder value through the development of appropriate relationships
with key customers and customer segments. CRM unites the potential
of IT and relationship marketing strategies to deliver profitable, long-
term relationships. Importantly, CRM provides enhanced opportunities
to use data and information both to understand customers and
implement relationship marketing strategies better. This requires a
cross-functional integration of people, operations, processes and
marketing capabilities that is enabled through information, technology
and applications.
26

This definition, supported by several other studies (Ernst, 2011; Ahearne et al., 2012)
offers a definition which attempts to encompass all the key elements of CRM from the
business and IT disciplines. As such, it has been seen as relevant for use in this study.
E-CRM has emerged from the use of internet and web technologies to facilitate the
implementation of CRM. Additionally, it has focused on the web-based interaction
between businesses and customers. In the literature, some researchers have
differentiated between CRM and e-CRM, while others have suggested that e-CRM is
an extension which integrates CRM technology into the e-commerce realm, rather
than being a different application or system. Therefore, CRM and e-CRM term will be
used interchangeably in this study.
2.3.2 Types of CRM
According to Payne (2006), CRM can be classified into three types: operational,
analytical, and collaborative. Although Payne argues that businesses will need to
integrate the three types/solutions of CRM in CRM implementation in order to
successfully generate superior customer value and satisfaction, other researchers
argue that research on how to incorporate these types of CRM is currently
underdeveloped (Bose, 2002; XU and Walton, 2005).
Operational CRM is also known as a front-office CRM (Dych, 2006), focusing on
the automation of businesses processes. Buttle (2008) has suggested a variety of CRM
applications that may enable the automation of marketing, selling, and service
functions, such as market segmentation, campaign management, event-based
marketing, product configuration, contact and call centres, and so on, as shown in
Table 2.2.
Table 2.2: Forms of Operational CRM








Source (Buttle, 2004:5)
Analytical CRM is also known as a back-office CRM and is concerned with the
capture, storage, organisation, analysis, and exploiting of customer data, to develop
customer and business value. The significant role of analytical CRM has been
recognised by marketing researchers, who hold that CRM facilitates business
Marketing automation
o Market segmentation
o Campaign management
o Event-based marketing
Sales force automation
o Opportunity management
o Contact management
o Proposal generation
o Product configuration
Service automation
o Contact and call centre
o Web-based service
o Field service
27

understanding of individual consumers behaviour, allowing in turn for better
targeting and customising of marketing communication (Xu et al., 2002). Therefore
businesses now are more aware of the need for analytical CRM in order to deliver
value for customers and shareholders (Payne, 2006). Developing analytical CRM
solutions requires a cross-functional integration of information technologies such as a
database, a data warehouse, data mining, online analytical processes (OLAP), a
website, and an intranet/extranet. Businesses are sometimes challenged by the fact
that the analytical function of the captured and collected data may be accomplished
using separate systems, such as CRM systems, decision support systems (DSS),
expert systems, and enterprise resource planning (ERP). As a result of the pressure
from businesses and researchers, CRM vendors have either offered their analytical
solutions or developed a partnership with business intelligence vendors to integrate
analysis capabilities into their systems (Dych, 2006).
Collaborative CRM is concerned with the interaction between a business and its
multiple possible channels to allow greater responsiveness to customers throughout
the supply chain (XU and Walton, 2005; Payne, 2006). It enables communication and
interaction between the business, customers, employees, suppliers and partners. It also
helps businesses to manage and synchronise customers interaction points (such as
online communities) and communication channels, develop B2B customer exchanges,
and personalize services. Therefore, the customer-centric services are labelled as
collaborative CRM, as opposed to the operational CRM services such as automation
of sales and call centres. The Collaborative CRMs broader database has led to higher
quality knowledge, as the consolidation and comparison of customers and market data
has facilitated the exploitation of potential synergies (Kracklauer et al., 2004).
Although researchers have suggested that Collaborative CRM is significant to ensure
the CRM efficiency and delivery of values to businesses and customers (Zeng et al.,
2003; Kracklauer et al., 2004), only twenty percent of CRM vendors are understood
to offer collaborative CRM in their system, to include employees, suppliers and
partners (XU and Walton, 2005). Such data might explain the perceived high failure
rate in CRM implementation.
2.3.3 CRM in E-Business
In the literature there is no one definition for e-business or e-commerce. Different
association of the terms come from different perspectives; this is similar with
frameworks for classifying e-commerce and e-business frameworks. Over the last few
decades, researchers have investigated e-commerce from different perspectives
including communication, business processes, commercial, service, learning,
collaborative, community and online shopping (Turban, 2006; Chaffey, 2009). In the
literature, the e-business and e-commerce terminologies have been discussed widely.
Some researchers have suggested that these are equivalent and could be
interchangeably used, while others distinguish between them (Chaffey, 2009; AMA,
2010).
28

According to Kotler and Armstrong (2008), e-business refers to the usage of
electronic communication technologies to conduct a company business, and includes
all the information exchange within or between businesses and customers. In this
respect e-commerce is more specific than e-business in that it involves only the
buying and selling process between the businesses and their customers through the
internet. Kotler and Armstrong also state (ibid.) that e-commerce tools would lead to
increased efficiency and flexibility, since they have a significant role in supporting
customer relationship marketing, given the one-to-one interactive nature of the
internet. Turban (2006) asserts that e-business refers to a broader definition and does
not only include the buying and selling process, but also servicing customers,
collaborating with partners and suppliers, and facilitating electronic transaction within
the business. Other researchers view e-business as a newer term of e-commerce. They
explain that e-commerce represents business transaction on the internet, while e-
business means business models built around networking technologies; e-business
encompasses much more than e-commerce, in that it utilises information intelligence
for increasing efficiencies, knowledge management, building partnerships, and
marketing strategies (Taylor and Murphy, 2004; Strauss et al., 2005; Becker, 2007).
The existing literature seems to agree that e-business refers to a broader definition of
e-commerce. E-commerce has been widely identified as referring to commercial
transactions on the internet, while e-business is understood to embrace all business
processes, including production, servicing customers, collaborating with partners and
suppliers, and electronic transactions. Since CRM uses electronic communication
media such as the internet to enhance relationship with customers, this means that
CRM enables e-commerce functionality and is a key element of e-business (Chaffey,
2009). Therefore, this study is a subfield of e-business and e-commerce literature.
2.3.4 Software Vendors in the CRM Marketplace
The CRM market has grown drastically over the last few decades. However,
perceived growth and penetration rates vary, depending on how CRM is defined.
Researchers argue that a broad definition of CRM mean an enterprisewide
integration of technologies such as data warehouse, network, supply chain
management (SCM) and enterprise resource planning (Bose, 2002; Xu et al., 2002;
Chen and Popovich, 2003; Payne, 2006; Buttle, 2008). Moreover, they argue that it is
part of a global market in enterprise application software (EAS) that encompasses
three major application suites: SCM, ERP and CRM (Buttle, 2006). Gartner (2008)
estimates that the market for CRM exceeded $7.4 billion in 2007, with moderate
growth rates thereafter, predicted to continue through 2012. Overall Gartner (2008)
expects the CRM market to grow at a compound annual growth rate (CAGR) of 11.1
percent between 2007 and 2012. It is suggested by Buttle (2008) that organisations
focus on their implementation of CRM for delivering consistent customer
communication across sales, services and marketing. Though these areas may have
reached a maturity level in the market, a future transformed focus is expected to
29

reflect a future growth in contact centres, marketing automation and analytics,
customer service and automation across a variety of channels.
CRM vendors offer varying levels of sophistication for product tailoring, service
innovation, customer segmentation, individual relationships, and customer
profitability. They are all challenged by the complexity of managing sales, marketing,
and customer services and supporting these in a cross channel environment. This has
raised a great need for complex knowledge capability solutions, and integration with
other existing software such as ERP and SCM. Hence CRM software vendors have
offered front-office suites and integrated applications to enable all activities in direct
contact with customers. One problem is that the increasing number of variant CRM
vendors, and the combination of applications, has strained even highly adaptable
CRM systems. Gartner (2008) identifies the key vendor groups as sales (Oracle and
Siebel), customer service (SAP and Siebel), marketing (ATG, Facebook and
Microsoft) and e-commerce (Oracle and IBM). A number of these vendors operate in
more than one of these groups. Therefore, the nature of CRM solutions varies
according to the category of the vendor. The variation in CRM vendor solutions
reflects differences in the ways in which vendors define CRM.
Gartner (2008) also segments CRM application vendors, according to predetermined
architectural styles, into five segments: the CRM application suite (E.piphany,
Siebel), the integrated enterprise-application suite (Oracle, PeopleSoft, and SAP), the
best-of-breed CRM (Avaya, and Broadvision), the model driven application (IBM and
Oracle) and the model-driven framework (Portrait software and Garham).
It is essential for CRM vendors to position CRM in its strategic context so that they
may deliver high value to their potential customers (Dych, 2006). Failing to do so
would risk a negative impact on businesses and their vendors. Strategic context
involves an in-depth understanding of businesses situations, motivation, and
behaviour. While CRM can improve business performance and sustain its competitive
advantage, Payne (2006) suggests that CRM integration, specification and careful
implementation are the key to its success.
2.3.5 CRM Adoption
According to Damanpour (1991), innovation adoption is conceptualised as a two-
stage model: initiation and implementation. The initiation stage covers all activities
pertaining to information gathering, forming an attitude, and resource allocation
leading to the adoption decision. In the implementation stage, the organisation decides
to purchase and make use of the innovation. Similarly, Ko et al. (2008) adapted
Rogerss innovation adoption model and explored the status of CRM adoption among
organisations by focusing on two main stages: perception and implementation. The
perception stage refers to cognitive beliefs underpinning an attitude towards CRM.
Positive perception about CRM benefits leads to decisions as to its adoption and
implementation, the stages of which will depend on organisational deployment of
specific CRM technologies/strategies.
30

In order to provide a holistic comprehensive picture of innovation adoption within an
organisational context, technological innovation adoption literature should be
examined. This is specifically true for CRM adoption, which has received
considerable attention from academics and practitioners, but still faces major
challenges in reaping its full benefits (Dibb, 2004). In the information technology
area, the general problem of innovation adoption is discussed using different
theoretical foundations, which all seem to benefit from the theory of reasoned action
(Fishbein and Ajzen, 1975). This is also known as attitude theory, or Rogers (1983)
innovation diffusion theory. The attitude theory (e.g. Fishbein and Ajzen, 1975)
suggests that beliefs mediate the influence of external factors on behavioural
decisions. In the context of organisational adoption of CRM, it has been noted that the
beliefs or perception of individuals in organisations, in relation to CRM benefits, tend
to mediate the impact of external factors on the implementation of CRM
(Plakoyiannaki, 2005). A recent study indicates that aligning employees needs with
CRM strategies is vital for CRM implementation (Vella and Caruana, 2012). Hence, it
can be concluded that employees perception of CRM benefits plays a key role in
shaping an organisations behavioural decisions about the implementation of CRM
(Day, 2002). In other words, positive perception of CRM gives both purpose and
direction towards its successful implementation. Such an understanding enables
organisations to commit their efforts to creating a positive attitude towards CRM
among employees by providing an environment conducive to CRM adoption. This
study focuses upon two stages of the adoption process: perception, and
implementation, which offer specific adaptation of Rogerss innovation adoption
process framework.
The Innovation Diffusion Theory (IDT) also known as Diffusion of Innovation (DOI)
is adopted in this study, because CRM is perceived as an innovative and an emerging
new modern marketing paradigm (Goldenberg, 2008). The IDT model,
comprehensively developed by Rogers (1962, 1983, and 1995), has been applied
across various disciplines such as anthropology, sociology, education,
communication, marketing, management and geography (Rogers, 1995). According to
Chen et al. (2000), IDT is one of the primary theories applied in technology
innovation. However, to date, it has received minimal coverage amongst CRM
adoption studies. Therefore, this study attempts to bridge this gap in the literature.
The main elements of the process of diffusion of innovation are based upon the
concept of innovation as an idea, a product, a technology, or a program that is new to
the adopters, and on the concept of diffusion as the process by which an innovation
is communicated through certain channels over time among the members of a social
system (Rogers, 1995:5). The IDT suggests that the adoption process of a decision-
making unit and the way it is approached is fundamental to the diffusion paradigm.
The innovation adoption process is defined as the process through which an
individual or other decision-maker unit passes from first knowledge of an innovation,
to forming an attitude toward the idea, and to confirmation of this decision (Rogers,
31

1983:163). The adoption decision unfolds as a series of stages, flowing from
knowledge of the existence of the innovation through to persuasion, decision,
implementation, and confirmation.
During the knowledge stage an organisation becomes aware on an innovation. In the
knowledge phase, an organisation begins to gain an understanding of the innovation.
In the persuasion phase, an organisation attempts to judge the salient characteristics of
the innovation and forms an attitude towards the innovation. Searching for
information about the innovation costs and benefits often helps to persuade an
organisation to adopt the innovation (Rogers, 1995). Without such information,
organisations may hesitate to invest in CRM if there is uncertainty about the benefits
and costs of adopting and implementing CRM. During this phase, general perceptions
about the innovation are formed and developed. In addition, specific perceptions
about the characteristic of the innovation (perceived benefits) are shaped (Ko et al.,
2000). Researchers have suggested that during the persuasion phase the organisation
is influenced by organisational characteristics, such as the size of the organisation or
the external business environment (Ko et al., 2008). At the decision stage, there will
be an adopt/reject outcome. At the implementation stage, an organisation will act on
the decision-maker units decision. Finally, at the confirmation stage, an organisation
reflects on the innovation decision and implementation process and reassesses the
adopt/reject decision. This study focuses upon three stages of the adoption process
proposed by Ko et al. (2008): persuasion, decision, and implementation.
Many researchers have explored the benefits of CRM. Organisations are seeking not
only to build competitive advantage by attracting new customers but also to satisfy
and increase customer retention rates, by developing customer-centric business
strategies that enhance customer relationships (Day 2002). Additionally, CRM
facilitates the acquisition of customers and analysis of customer requirements more
efficiently (Becker et al., 2009). A sample of specific advantages identified in the
literature includes the following:
Gaining a competitive advantage.
Analysing customer requirements more efficiently.
Identifying new selling opportunities.
Increasing customer satisfaction.
Increasing customer loyalty.
Increasing customer retention rate.
Increasing revenue and profitability.
Increasing employee productivity.
Enhancing customer relationships.

The persuasion phase leads to a decision making process, wherein organisational
members contribute with their direct perception to the adoption decision process,
made by the decision-making individuals in the organisation who possess the power,
status, or technical expertise. However, an organisations culture also plays a
32

significant role in influencing the decision-making units perception of CRM
initiatives (Zablah et al., 2004). Once the adoption decision is made, organisations
seek to implement specific CRM strategies/technologies. At this stage, it is essential
for businesses to integrate the three component parts of CRM: analytical, operational,
and collaborative, in order to achieve successful CRM implementation (Xu and
Walton, 2005). Technology is defined in this context as the physical combined with
the intellectual or knowledge processes by which materials in some form are
transformed into outputs used by another organization or subsystem within the same
organization (Hulin and Roznowski 1985:47 as cited in Ko et al., 2008). Ko et al.s
(2008) study is one of the rare CRM studies that has applied the innovation adoption
process theory, hence this study follows Ko et al.s (2008) list of technologies related
to CRM, including:
Personal customisation through customer database analysis.
Developing products through customer involvement.
Offering customer loyalty programs.
Offering real-time customer services.
Managing customer loyalty.
Managing customer complaints.
Developing member-only site in your organisations website.
Categorising/segmenting customers based on spending (lifetime value(.
Customising services depending on customer categories/segments.
Providing customer with information via email.
Developing sales promotion strategy.
Providing products and services in one place.
Automating cross-sell and up-sell capability.

2.4 CRM Adoption from the Marketing Perspective
2.4.1 Customer-Centric Orientation and CRM
Businesses are now focused on the values of relationships with their customers, and
on transforming their strategies from product-centric to customer-centric (Bose,
2002). From a marketing perspective, CRM is most remarkable in its customer-centric
relationship marketing as an effective business strategy. Through this customer-
centric focus the business seeks to create overall or cumulative customer satisfaction,
which is significant in building trustworthy relationships and retaining competitive
advantage (Gummesson, 1994; Grnroos, 1995; Adamson et al., 2003). According to
Day (1999), the customer-centric approach lies in crafting accountability for
managing customer relationships. In addition, Grnroos (2000) states that relationship
marketing builds from a customer-centric approach to enhance customer loyalty and
long-term relationships. Researchers summarise the differences between the product-
centric and customer-centric business approaches (Shah et al., 2006). The customer-
centric approach focuses on customers needs and relationships in every core aspect
of the business, whereas the traditional product-centric approach focal point has been
33

the sale of products. According to Kim et al. (2005), customer-centric orientation
places customers knowledge, interaction, acquisition, value, satisfaction, and
retention at the centre of the value creation process. Additionally, Wang and Qualls
(2007) described the customer-centric orientation as an organisations ability to
segment, interact with, satisfy, and build long term relationships with its customers.
Many scholars have stressed that organisations need to consider CRM as a strategic
marketing approach, to understand and influence customer behaviour through
meaningful communication, and to improve customer acquisition, profitability,
retention, and loyalty (Swift, 2000). This perspective is embedded in the Anglo-
Australian school as discussed earlier in the section discussing schools of thought in
regard to relationship marketing. More precisely, the organisations marketing
strategy should be customer-centric to maximise organisational profitability.
According to Wetsch (2003:4) the elements of relationship marketing when
combined with a customer-centric approach to marketing serve as a foundation for
CRM. Moreover, attaining CRM goals requires a customer-centric strategic
orientation, which aligns business strategies with customer needs to generate profit by
maximising customer lifetime value (Payne, 2006).
Studies of CRM implementation across the marketing, management and IT disciplines
have used customer-centric terms, customer-focused, market orientation, and market-
driven to reflect a similar concept. These disciplines agree on the need for customer-
centricity as a foundation for CRM implementation (Plakoyiannaki and Tzokas, 2002;
Abbott et al., 2001; Ling and Yen, 2001). Researchers from the IT discipline
emphasise that it is essential to CRM implementation that relationship marketing be
accepted as a customer strategy across all levels of organisation (Goodhue et al.,
2002). Furthermore researchers from the business discipline underline that CRM adds
value to the essence of customer-centric orientation (Wright et al., 2002). In an
attempt to develop a holistic approach to CRM, Payne (2006) argues that businesses
need to position CRM in the strategic context of customer-centricity. Therefore, CRM
is a comprehensive business and marketing strategy that aligns technology, process
and activities around the customer (Anton, 1996; Anton and Hoeck, 2002). The
conclusion is that technology advances enhance customer relationships by enabling
the essence of customer-centric orientation through the deployment of the CRM
(Dewhurst et al., 1999). Promoting customer-centric orientation in the organisation
needs strategic planning which starts with strategic alignment with customers through
an effective customer-centric planning process, which then needs to be aligned with
strategies and technologies (Gurau et al., 2003).
Reynolds (2002) and Alshawi et al. (2011) explain that defined business and
customer-centric strategies, combined with a clear understanding of how business
objectives relate to CRM functions, should be in place before any technology
adoption decision-making. Several studies have concluded that businesses which in
developing a customer-centric strategy have grasped the potential of CRM
technology, can provide return on business investment (Matsuno and Mentzer, 2000;
34

Reynolds, 2002; Alshawi et al., 2011). However, according to Rigby et al. (2002:3),
installing CRM technology before creating a customer-focused organisation is
perhaps the most dangerous pitfall. Additionally, a customer-centric approach should
conceive and implement customer acquisition and retention strategies before adopting
the CRM system. Consequently, customer-centric orientation towards initiating and
continuing a relationship can be seen as an essential antecedent of CRM adoption
(Abbott et al., 2001). Moreover, Buttle (2008) concludes that businesses promoting a
customer-centric philosophy in their culture make the adoption of CRM less
threatening to business people. Additionally, Tan et al. (2002) identify critical phases
for the implementation of CRM: researching and identifying objectives, establishing
and communicating customer-centric strategy, planning, redesigning work processes
and consolidating corporate resources, choosing the right CRM system, and finalising
and continuously improving the process.
According to Ling and Yen (2001), businesses need to make a transition from the
legacy of information systems designed for product-related processes to customer-
centric systems, in order to become customer-centric, increase organisation
knowledge of customers, exploit knowledge, maximise efficiency of technology, and
build flexibility. In order to achieve successful CRM adoption, customer-centric
orientation requires a comprehensive framework for systematic management of
customer knowledge (Shaw and Ivens, 1999), which must integrate knowledge
management capabilities and CRM activities (Bose and Sugumaran, 2003; Finnegan
and Currie, 2010). Researchers show a significant relationship between knowledge
management capabilities and CRM impact (Croteau and Li, 2003; Romano and
Fjermesad, 2003).
In facilitating creation of superior value for customers and shareholders along with
enhanced customer data capture and management, CRM helps businesses to maximise
the lifetime value of desirable customers and segments (Buttle, 2008). Optimising
customer relationship entails an inclusive understanding of profitable and non-
profitable customers, and the alignment of business processes which will permit
interaction with individual customers based on their needs (Chen and Popovich,
2003). Customer-centric orientation is a resourced and organised strategy which aims
to satisfy profitable customers. This should involve many elements that are also
characteristic of CRM adoption, including customer segmentation, acquisition,
profitability analysis, satisfaction, and retention (Buttle, 2008). These characteristics
of CRM adoption will be discussed in more detail in the following sub-sections.
a) Customer Segmentation
Marketing scholars have suggested that customer segmentation is significant for
implementation of CRM, redefinition of CRM strategies and tactics, and effective
resource allocation (Meadows and Dibb, 2008). Generating an in-depth understanding
of the customer segmentation process may help businesses to identify the type and
value of relationship they need to implement (Ling and Yin, 2001; Marcus, 2001;
35

Roberts et al., 2005). The CRM system is a marketing tool that could be used to
segment and target customers. It helps businesses to create and maintain their
competitive advantage by promoting a comprehensive insight into the interactive
customer's needs and behaviours (Marcus, 2001; XU and Walton, 2005). Researchers
suggest that traditional segmentation methods which rely on customers
demographics, behaviours, and psychographics do not reflect customer-specific needs
and preferences (Swift, 2000; Ling and Yin, 2001). The idea of serving smaller
segments through the individualisation of offerings is only possible through CRM
(Venkatesan and Kumar, 2004). Therefore, traditional segmentation methods should
be combined with interactive CRM information (Roland and Verhoef, 2005). In other
words, an effective segmentation scheme may be derived by means of convergence
between traditional segmentation techniques and the current capabilities of CRM. In
this light, CRM could be seen to improve and complement traditional segmentation
thinking rather than replacing it.
Similarly, Bailey et al. (2009) suggest that organisations should optimise a traditional
segmentation process using the rich data on individual customers offered from CRM.
Furthermore, reinforcing the link between traditional segmentation and CRM allows
for individualised customer treatment, increasingly imperative when businesses are
seeking to broaden their understanding of customer needs, and to pursue the
development of customer-centric marketing strategies (Clark and Baker, 2004). Rigby
et al. (2002) proposes that the adoption of CRM without good old-fashioned
segmentation is doomed to failure. Indeed, one reason segmentation is so central is
because it stresses the importance of gaining customer insights in order to plan
accordingly for effective resource allocation. In particular, the effective use of
traditional segmentation analysis plays a critical role in helping businesses relate more
easily to CRM values.
This means that taking responsibility for segmenting customers, which may include
the activities of building and updating a customer database, is essential in order to
meet the challenges of adopting CRM (Blattberg et al., 2009; Meadows and Dibb
2012). Meadows and Dibb (2012) propose that CRM adoption is a journey which
begins with segmentation analysis and identification of profitable customers, and that
customer insight provided by segmentation analysis is the first step towards customer-
centric orientation. If organisations fulfil their responsibilities in building and
updating customer databases with CRM analytical tools, they will be able effectively
to segment customers and focus on serving every customer individually according to
their unique needs and heterogeneity (Roland and Verhoef, 2005). CRM can segment
customers in terms of their needs, frequency of purchase, recent purchases and
contribution to profits.


36

b) Customer Profitability Analysis
Businesses do not always profit by every customer; more advantageous is the
targeting of more profitable customers, in a process known in the literature as
selective relationship marketing (Kotler, 1992). The Pareto-Law, or 80/20 rule,
suggests that 80% of revenues are generated by only 20% of customers, and that 80%
of total costs are generated by only 20% of customers (Christopher et al., 2002).
Although profitability has always been considered as significant for business success,
it has not always been easy to gauge real profitability where businesses have focused
more on product and distribution channel costs than on customer costs. While most
businesses know their revenue from customers, they tend to treat sales and marketing
costs as well as service and support costs for individual customers as overheads
(Reinartz and Kumar, 2003; Van Raaij, 2003). Alternatively, according to Buttle
(2008), measuring customer profitability allows businesses to trace revenues and costs
to customers, either at segment group or individual level (such as business-to-business
companies). Segmenting customers based on profitability allows businesses to build
up a portfolio of relationships with customers in precisely those segments which are,
or have the potential to become profitable.
A study by Homburg et al. (2008) shows that prioritising customers reduces
marketing costs and positively influences relationships with high value customers
without having any negative influence on non-profitable customers. In spite of this,
Homberg et al. (2008) acknowledge that prioritising customers based on their
profitability is a concept which is frequently challenged by scholars for three reasons.
First, organisations need to be careful not to eliminate non-profitable customers, as
they provide a pool from which the profitable customers may emerge, though often
only temporarily (Day, 1999). In this vein, prioritising customers may result in
neglecting potential economies of scale (Johnson and Selnes, 2005). Second, it is
argued by a number of researchers that differentiating between customers may leave
non-profitable customers dissatisfied and apt to spreading negative word of mouth
which may damage relationships with profitable customers (Reichheld and Sasser
1990; Kumar and George, 2007). Third, not prioritising customers enables businesses
to hedge risks of investing in relationships with particular customers. Moreover, in the
process of calculating customer lifetime value, businesses may ignore many relevant
variables such as cost of service.
Against this background, it is largely argued that once businesses have identified their
customers drivers and profitability, they are better able to develop attractive offerings
to maximise the profitable customer lifetime value and earn customer loyalty (Gleaves
et al., 2008). The concept of Customer Lifetime Value (CLV) is often used to refer to
the monetary value of the individual customer over his/her lifetime; this is generally
calculated by multiplying the customers average spending by the customer average
lifetime in a particular organisation. CLV is developed with a view to retaining
customers than attracting new customers. It is a pivotal concept pervading many CRM
studies (Venkatesan and Kumar, 2004; Blattberg et al., 2009).
37

Although in order to identify profitable customers, businesses have used their
traditional accounting systems to calculate the average cost of serving a customer,
they have still failed to target the most profitable segments in their market. As a
consequence, businesses have been motivated to use CRM as a means of exploiting
technology advances, and to enhance customer data capture and management which
will enable profitable customers to be attracted and retained. A central database of
customer characteristics and behaviour provides a basis for creating consumer
profiles, which will help predict customer life-time value and future profitability
(Reinartz and Kumar, 2002; Kumar and Shah, 2004). Given the relative importance of
customer profitability analysis to businesses, marketing researchers have suggested
that customer profitability analysis is significant for CRM adoption (Bradshaw and
Brash, 2001; Silva and Rahimi, 2007). Businesses can enhance the efficiency of CRM
and increase profitability by assessing customer profitability, and thus plan and
control customer-centric marketing strategies (Homburg et al., 2008).
c) Customer Satisfaction
According to Kotler and Armstrong (2008), customer satisfaction is the extent to
which a products perceived performance matches or surpasses the customers
expectations. It is at the core of the marketing concept which has been the guiding
force for leading businesses (Webster, 1988; Kotler and Armstrong, 2008). Business
interest in customer satisfaction has rapidly increased over the last decades, as the
strong link between customer satisfaction, loyalty and profitability has become
clearer. Therefore, customer satisfaction has been widely used as the best indicator of
evaluating business and marketing performance (Hill and Alexander, 2006; Tuli and
Bharadwaj, 2009).
Traditionally, businesses have been able efficiently to satisfy customers with
standardised products, demonstrating that mass production and mass marketing can be
effective and efficient (Chen and Popovich, 2003). However, with an increasingly
high intensity of competition, facilitated by a dramatically wider variety of
alternatives available to customers on the internet, businesses have been pressured to
acknowledge the changes in the power of customer choice, and to shift from mass
marketing to customer-centric and relationship marketing. In this respect, CRM is
widely acknowledged as a means of retaining customers and increasing customer
loyalty through superior satisfaction (XU and Walton, 2005; Gartner, 2008).
According to Gartner (2008), most businesses actively implementing CRM have done
so with a view to improving customer satisfaction, since CRM exploits and leverages
interactive communication and genuinely involves customers with businesses to
maximise their satisfaction (Chen and Popovich, 2003; Maklan and Knox, 2009).
CRM helps businesses to identify customers behaviour patterns and future needs, to
determine their satisfaction level, and to support customer segmentation. It enables
businesses to understand their customers and to use this knowledge proactively to
create customer value and increase customer satisfaction, especially when businesses
38

share customer information with their suppliers and partners (Feinberg and Kadam,
2002; Khalifa and Shen, 2005). Thus, CRM could help in identifying and resolving
dissatisfied customers issues, since dissatisfied customers often do not lodge a
complaint, but simply switch to another competitor (Payne, 2006). However, overall,
researchers suggest that CRM features are not always unilaterally associated with
improved customer satisfaction, and this could affect how CRM is adopted and
defined within the business field (Feinberg and Kadam, 2002; Richards and Jones,
2008).
d) Customer Acquisition
CRM has become crucial in delivering a successful marketing strategy, as it has
helped businesses to analyse and examine customers past purchases and learned
characteristics, so that they can improve acquisition, cross-selling and up-selling, and
increase profits (Kotler, 1992; Peppard, 2000). Therefore, businesses are now
empowered to make intelligent decisions as to which customers to acquire, which
means to use in communicating with them, and which products or services to offer
them (XU and Walton, 2005). CRM analytical tools help businesses to acquire the
right customers based on customer knowledge, which in turn drives effective
customer acquisition programmes and increased profits (Peppard, 2000; Christopher
et al., 2002). According to Buttle (2008), CRM operational tools could help in such
customer acquisition processes as in-lead management, campaign management, and
event-based marketing. They may also help to reduce the cost of customer acquisition
by deploying automated electronic systems, such as automated sales forces and
automated telephony services, which reduce costs such as staff costs and overheads
(Baker, 2003).
Over the last two decades, marketing scholars have highlighted that the cost of
customer acquisition is rising, while the cost of customer retention is lower and more
profitable. Thus, business emphasis has shifted towards building loyalty and
relationship with customers (Rosenberg et al., 1984; Dych, 2002; Sheth and Sharma,
2008). However, since even businesses with high retention rates can easily lose
customers, acquiring new customers is essential as the first stage of the customer life-
cycle (Ang and Buttle, 2006). CRM is said to help businesses to identify profitable
customers and to reduce the cost in each target segment. According to Payne
(2006:140), improving customer acquisition economics is concerned with acquiring
customers at a lower cost, acquiring more customers, acquiring more attractive
customers, and acquiring customers utilising new channels.
e) Customer retention
As discussed earlier, there is a strong link between customer satisfaction, loyalty and
profitability. The relative importance of customer retention or loyalty has been
increasingly evolved by researchers over the last decade. It has been argued that it
costs marketers five times more to attract a new customer than to keep an existing
customer; therefore a small increase in customer retention can significantly increase
39

business profits, even after acknowledging that customer retention effect on profits
may only be revealed in long-term financial statements (Reichheld, 1996; Pelsmacker
et al., 2007).
Designing a customer-centric organisation involves fostering customer loyalty by
becoming proactive with customers. Jacoby et al. (1973:2) are cited in Parvatiyar and
Sheth (2001) as arguing that Brand loyalty is essentially a relational phenomenon.
Marketing scholars have agreed that the better relationship a business has with its
customers, the more loyal customers and profits it has (Zineldin, 2006). This is shown
by a wide number of studies demonstrating that a long-term relationship is positively
related to business performance (Baker and Sinkula, 1999; Gummesson, 2008). CRM
has been used as a means of reinforcing customers loyalty, increasing market share
and profitability, and reducing the costs of acquiring new customers (Lee-Kelley et
al., 2003; Chen and Chen, 2004). With the advent of technology, customers have a
variety of choices and more control. Therefore, CRM initiatives such as loyalty and
affinity programs have helped businesses to closely align customer needs,
product/service offering, and marketing, in order to foster customer loyalty and create
mutually beneficial long-term customer relationships (Lee-Kelley et al., 2003). It has
been claimed that 93 percent of businesses actively implementing CRM have
maintained increased loyalty and satisfaction, which would justify their investment in
a CRM system (Dych, 2002).
f) Optimising customer experience
The marketing discipline has been fundamentally concerned with the quality of
customer experience since it is this which may differentiate a business's positioning
from its competitors (eg: Lemke et al., 2011). Researchers have suggested that a
superior quality customer experience may increase customer loyalty, trust and the
psychological cost of switching to a different supplier (Reichheld and Sasser, 1990;
Friman et al., 2002; Lee-Kelley et al., 2003). By repeatedly offering positive value to
the profitable customer in an extended relationship, a positive customer experience
can be generated to enhance customer loyalty and trust and decrease customer price-
sensitivity. In this way the customer's experience eventually creates a highly
profitable long-term relationship and retention. According to Schmitt (2003),
customer experience provides more guidance on evaluating business and marketing
performance than customer satisfaction because it identifies the details that result in
satisfaction. Therefore, it is important for businesses to translate their strategy and
processes into value-adding activities with customers.
Customer experience embraces every aspect of a businesss offering: product
or/service, packaging, advertising, reliability, quality of different interaction channels,
and ease of use (Meyer and Schwager, 2007). However, with such a multiplicity of
factors, it is difficult to identify those most likely to maximise positive customer
experience. This is where the advent of CRM technology may enable businesses
better to understand their profitable customers, offer products/or services that will
40

continuously delight them, manage their experience, and increase their profitability.
CRM activities involve collecting and using customers data intelligently to shape and
deliver a continuous and customised superior experience and to build relationships
(Payne and Frow, 2005). The advent of technology and the internet has enabled
customers to interact with businesses through more than one channel (to include
websites, call centres, mobile access and retail outlets) throughout all stages of the
sales cycle such as pre-sale, sale and post-sale. This has increased the necessity for
businesses to offer integrated activity across a variety of channels in order to
maximise customer value and ensure positive customer experience (Payne, 2006).
Hence CRM should enable businesses to consistently offer individualised
relationships and satisfy customers via any interaction channel.
2.5 CRM Adoption from the IT Perspective
CRM is enabled by technological advances. As a result technology is one of the most
important components of CRM. IT researchers have focused mainly on two
technological themes: CRM alignment with knowledge management dynamics, and
CRM usage and implementation factors. These two main themes arising from the
literature from an IT perspective are discussed in the following sub-sections.
2.5.1 Knowledge Management
The relationship of CRM with technological capabilities and knowledge management
is recognised as an important research field for exploring factors affecting CRM
adoption (Dous et al., 2005). Knowledge management has recently gained attention
from academics from marketing, management, and information technology
disciplines. From the marketing point of view, customer-centric analysis needs a
comprehensive framework for systematic management of customer knowledge and
therefore needs to integrate knowledge management capabilities with CRM activities
in order to achieve successful CRM implementation (Finnegan and Currie, 2010).
CRM relates to the acquisition of customer knowledge and the dissemination of that
knowledge (Boulding et al., 2005). Knowledge management in turn enables marketers
to reap the rewards of CRM, as it complements CRM in working with processes that
integrate customer knowledge throughout the organisation (Campbell, 2003).
From the managerial point of view, knowledge management is a firm-wide initiative
maximising effectiveness of and returns on the firms knowledge. This concept is
closely related to CRM in the need to create knowledge-enabled CRM processes
which will allow firms to evaluate their organisational performance, such as customer
profitability and satisfaction to aid their managerial decisions (Gebert et al., 2003).
Since CRM relies heavily on data warehouse capabilities, from a technological point
of view knowledge management has become a significant catalyst of CRM (Romano
and Fjermestad, 2003). In conclusion, a review of the various literatures of knowledge
management shows that varied disciplines provide similar yet distinct forms of
knowledge management.
41

Since gaining customer information and subsequently customer knowledge is a means
to attaining CRM objectives, it is concluded that CRM is strongly related to KM and
especially to customer knowledge management (Massey et al., 2001). From the
potential synergy between CRM and KM, a theoretical model has emerged, known as
customer knowledge management (CKM) (Gebert et al., 2003). Some researchers
such as Chou and Lin (2002) go further to consider CRM as an application of
knowledge management, in that it reveals strong knowledge intensity. According to
Von Krogh et al. (2000), knowledge management (KM) is the process of capturing,
managing and transmitting knowledge through the organisation and across the
organisational boundary. CRM implementation entails refining and realigning an
organisations knowledge management methods in order to obtain value-added
knowledge from and about customers; this in turn informs not only customer
purchasing behaviour and trends but preferences and attitudes (Romano, 2000;
Stefanou et al., 2003). Such realignment involves a change in organisational vision
and thus learning and innovation within an organisation (Moreno and Melndez,
2011).
Given that data warehouse capabilities are a significant catalyst of knowledge
management, it could be argued that the technology infrastructure within an
organisation is fundamental to these capabilities (Ocker and Mudambi, 2003).
Customer interaction with organisations is not restricted only to sales and marketing
departments, but to a wide variety of personnel and departments at different levels.
This suggests that CRM implementation efforts are successful when top management
implement suitable processes and technologies that support KM dynamics. These
dynamics include coordinated information gathering and sharing throughout all
customer channels (Lee-Kelley et al., 2003; Racherla and Hu, 2008).
An organisation implementing a CRM system needs the capability of capturing and
pulling together vast amounts of information about customers. In particular,
knowledge about profitable customers is vital for CRM, as it aids the development of
a learning relationship between the organisation and the customer (Sin et al., 2005).
Information on customers can be captured indirectly through business intelligence
tools such as data mining or data warehouses, and directly through employees.
Business intelligence tools help to incorporate customer information into business
strategy (Sin et al., 2005). However, it cannot be ignored that the challenge of getting
employees to record and share information they have cultivated on customers is
daunting (Gibbert et al., 2002), unless an adequate incentives plan is devised to serve
knowledge generation and sharing.
Knowledge management dynamics or capabilities are paramount for CRM strategy, in
order to equip all staff with knowledge of customer wealth so as to enhance long-term
relationship with profitable customers (Bose and Sugumaran, 2003). Hence, KM is
considered to be a main sub-process of CRM (Zablah et al., 2004). In fact, the
majority of CRM projects fail due to improper KM, which leads to a narrow view of
the customers (Gebert et al., 2003; Romano and Fjermerstad, 2003; Sigala, 2004). In
42

conclusion, CRM revolves upon knowledge management capabilities, since capturing,
managing, and transmitting relevant knowledge for CRM initiatives make the
deployment of KM capabilities necessary.
2.5.2 Usage and Employee Adoption of CRM
IT researchers indicate that system use has a strong effect on employees adoption of
CRM in organisations. This refers to the idea that employees must use the CRM
system to achieve their marketing goals which are often correlated with other
constructs (eg: Wu and Wu, 2005). A number of studies have successfully adopted
and extended the technology acceptance model (TAM) developed by Davis (1989), to
examine the acceptance of new technologies in the CRM domain. The TAM explains
IS usage-behaviour, which is subsequently influenced by behavioural intention, which
is in turn influenced by attitude and perceived usefulness of the system. Additionally,
attitude and perceived usefulness are influenced by the perceived ease of use.
The TAM is an adaptation of the theory of reasoned action (TRA) specifically tailored
for modelling user acceptance of information systems. A number of studies have
applied a variety of theoretical models to examine different aspects of technology
adoption. These theoretical models include: TRA (Fishbein and Ajzen, 1975), TBP
Ajzen (1985, 1991), TAM (Davis, 1989) and IDT (Rogers, 1962, 1983, 1995, 2003).
This study examines theses theoretical models as follows, in order to gain insight into
innovation characteristics which may influence employees adoption of CRM.
a) Theory of Reasoned Action (TRA)
Derived from the social psychology field, Fishbein and Ajzen (1975) proposed the
theory of reasoned action (TRA) to predict and explain human behaviour across many
industries and domains. Researchers have suggested that the TRA as a general model
has formed the backbone of many technology acceptance theories and studies (Davis,
1986; Glassberg, 2000). The TRA model explains individual behaviour (B) as a
positive function of an individual behavioural intention (BI) to perform the behaviour.
It also proposed that an individuals behavioural intention is driven jointly by personal
and social factors. The personal factor is termed attitude (A) and is defined as an
individuals degrees of evaluative effect toward the target behaviour (Fishbein and
Ajzen, 1975: 216). The second factor in this model is termed subjective norm (SN)
and is defined as the persons perception that most people who were important to
him think he should or should not perform the behaviour in question (Fishbein and
Ajzen, 1975:302). Figure 2.5 presents the TRA model.


43

Figure 2.5: Theory of Reasoned Action

Source: Ajzen and Fishbein (1980:84)
Fishbein and Ajzen (1975) also suggest that an individuals attitude, and the beliefs
they hold about themselves and their environments are underpinned by subjective
norm factors which eventually determine an individuals behavioural intention.
However, the TRA is a general model, and as such, it does not specify which beliefs
are effective for a specified context. In the model, beliefs are classified into two types:
behavioural beliefs towards the behaviour, and normative beliefs. According to the
TRA model, an individuals attitude towards behaviour consists of behavioural beliefs
while performing behaviour would lead to a certain consequence, and an evaluation of
the consequence of that behaviour. Moreover, a subjective norm consists of normative
beliefs, perceived expectation of referents (friends, classmates, family, and or
community), and referent motivation to comply. In the TRA, normative beliefs are
theorised as being similar to subjective norms, except that normative beliefs refer to
specific individuals or groups around the individual rather than a generalised
individual or group.
The TRA has been applied to a variety of research areas. Researchers have found
significant evidence for the validity of TRA predictions across research boundaries
(Sheppard et al., 1988). This conclusion is based on 87 studies using 12,625 subjects.
Riemenschneider (1997) supported the relationship between attitude and subjective
norm to behavioural intention. The significance of TRA theory has been understood
as its capacity to integrate numerous theoretical perspectives from psychology into
technology acceptance research. Although current models of technology acceptance
have their roots in many theoretical perspectives, most of them begin with the TRA
model. Davis (1989) introduced an adaptation of TRA, the technology acceptance
model (TAM), to explain and predict the behavioural intentions of individuals toward
IT usage (Riemenschneider and McKinney, 2001; Pavlou, 2003). Davis et al. (1989)
also provided a further explanation of the TRA in the context of technology adoption
and showed that user adoption and usage of IT innovation is ultimately determined by
personal beliefs and attitudes toward information systems. According to Sathye
(1999), adoption is the acceptance and continued use of a product, service, or idea.
Researchers have shown that the more accepting users are for IT systems, the more
willing they are to change their practices and invest their time and effort spent in
using IT systems (Succi and Walter, 1999). The TRA in an IT usage context explains
an individuals behaviour as a positive function of an individual intention to use the
44

technology; this intention is driven jointly by an individuals attitude and subjective
norms regarding the technology.
b) Theory of Planned Behaviour (TPB)
The Theory of Planned Behaviour (TPB) (Ajzen 1985, 1991) was developed from the
Theory of Reasoned Action (TRA) to introduce a new construct known as perceived
behavioural control (PBC). The TPB, developed to address behaviours not completely
under volitional control, theorises that behaviour is a direct function of behavioural
intention, which is determined by three factors: attitude, subjective norm, and
perceived behavioural control. Attitude and subjective norm are consistent with the
TRA. However, perceived behavioural control is an extension to the TRA model that
can contribute to the prediction of the behaviour in question.
The main difference between the TRA and the TPB is the addition of perceived
behavioural control. Ajzen (1991) suggested that perceived behavioural control
referred to an individuals perception of his/her control over performance of the
behaviour, and reflected individual beliefs regarding the access to mandatory
resources (such as time, physical abilities and money) and opportunities needed to
enable him or her to perform the behaviour (Ajzen and Madden, 1986).
The TPB has been applied across a wide range of disciplines, including marketing,
medicine and leisure (Ajzen and Driver, 1992; Berger, 1993). In the IT discipline,
several studies have successfully applied the TPB to understand individual acceptance
and usage of many technologies. For example, Harrison et al. (1997) studied the
adoption of technology in small businesses and applied the TPB, with results showing
that attitude, subjective norm, and perceived behavioural control were significant to
the adoption decision. In addition Hu et al. (1999) utilised the TPB to test the
adoption of technology using 431 physicians in the voluntary use of technology. The
major conclusions were that attitudes and perceived behavioural control were
significant predictors of intention whereas there was no significant relationship
between subjective norms and intention. One study, which utilised the TPB to test age
difference influence on technology adoption, indicated that younger individuals were
influenced by attitudes, whereas older individuals were influenced more by subjective
norm (Morris and Venkatesh, 2000). Armitage and Connor (2001) analysing previous
studies using the TPB in a meta-analysis study, demonstrated that there was a
significant effect of perceived behavioural control on intention, and suggested the
need for more work on the subjective norms variables to increase the predictability of
the TBP. However, Riemenschneider et al. (2003) combined the TPB and the
technology adoption model (TAM) and found that an integrated model representing
each model construct provided a better fit than each model alone. Another study has
compared the TRA and the TPB and concluded that the TPB, with decomposed or
deconstructed perceived behavioural control construct that included perceived control
and self-efficacy as a predictor of intentions and behaviour, gave a more satisfactory
explanation of the salespersons adoption of IS systems (Celuch et al., 2004).
45

Taylor and Todd (1995) described the decomposed theory of planned behaviour
(DTPB), arguing that the value of deconstructing or breaking down belief constructs
in the TPB into their underlying structures can potentially provide a better
understanding of the relationships between belief structures and antecedents of
intention. Shimp and Kavas (1984) held that an underlying structure of beliefs cannot
be organised into a single conceptual construct. Taylor and Todd (1995) integrate the
TPB, the TAM and the IDT so that the main components of the DTPB are the same as
the TPB although the attitude factor was integrated with the IDT and the TAM, as
shown in figure 2.6. In the DTPB attitudinal beliefs are based on the theory of the IDT
(Rogers, 1983) and the TAM, and further broken down into relative advantage,
compatibility and complexity. According to Taylor and Todd (1995), the DTPB gives
a better explanation of the power of intention in technology adoption than the pure
TPB and TRA.
Figure 2.6: Decomposed Theory of Planned Behaviour (DTPB)

Source: Taylor and Todd (1995:170)
Relative advantage is defined as the degree to which an innovation is perceived as
being better than the idea it supersedes (Rogers, 2003:229). It is one of the IDT
factors, which has been found to positively affect the adoption of innovations (Rogers,
1983; Tan and Teo, 2000; Lee et al., 2004, Wu and Wu, 2005). Researchers have
conceptually associated relative advantage with perceived usefulness construct in the
technology acceptance model (Adams, 1992; Taylor and Todd, 1995; Tung et al.,
2009). Compatibility of innovation is defined as the degree to which an innovation is
perceived as consistent with the existing values, past experiences, and needs of the


46

potential adopters (Rogers, 2003:240). Researchers prove that compatibility has a
positive relationship to innovation adoption (Premkumar, 2003; Wu and Wu, 2005;
Tung et al., 2009). Complexity of innovation is defined as the degree to which an
innovation is perceived as relatively difficult to understand and use (Rogers,
2003:257). Technology complexity diminishes a users understanding of the
technology and generates greater uncertainty for successful implementation;
consequently, it increases the risks in the adoption decision (Premkumar and Robert,
1999; Ramdani et al., 2009). Researchers find that when technologies are perceived to
be easier to use and less complex, there is a greater possibility of their being adopted
by the individual; therefore complexity has a negative relationship to innovation
adoption (Wu and Wu, 2005; Chen et al., 2009a; Ramdani et al., 2009). Researchers
suggest that complexity can be explained by another attribute (although in an opposite
direction), which is perceived ease of use construct in the TAM (Taylor and Todd,
1995; Wu and Wu, 2005). Perceived behavioural control depends on self-efficacy and
perceived facilitation conditions. Self-efficacy is defined as being confident of the
ability to successfully execute procedures to achieve the result in the situation (Ajzen,
1991; Compeau and Higgins, 1995), while the facilitating conditions reflect the
presence or the absence of resources needed to perform a specific behaviour (Triandis,
1980).
Different studies apply the DTPB and prove that the DTPB has a better predictive
power to behaviour than the pure TPB and TRA models. Hence it has been employed
across a wide range of IT usage disciplines. For example, e-brokerage adopters
(Bhattacherjee, 2000), Chau and Hu (2001) integrated TAM, TPB and DTPB models
to explore telemedicine acceptance of information technology, e-services (Hsu and
Chiu, 2004), e-commerce (Pavlou and Fygenson, 2006), and internet banking
(Hernandez and Mazzon, 2007).
c) Technology Acceptance Model (TAM)
According to the TRA, an individuals behaviour is a positive function of his/her
intention to perform the behaviour. Moreover, an individual behavioural intention is
influenced by two constructs: attitude and subjective norm regarding the behaviour.
Since the TRA is a general model designed to predict individuals behaviour in a wide
variety of disciplines, Davis (1986) introduced and designed the TAM to look
specifically at technology adoption and uses. The TAM adopted the beliefs-attitude-
intention-behaviour causal sequence put forward by the TRA (Fishbein and Ajzen,
1975). The TAM suggests that two beliefs, namely perceived usefulness and
perceived ease of use, are instrumental in explaining an individuals attitude and
behaviour intention. Evidently the TAM excludes subjective norm construct as a
determinant of intention due to theoretical and measurement problems; as Fishbein
and Ajzen acknowledge (1975:204), this is one of the least understood aspects of
TRA. However, subjective norm was included in Daviss later study (1989) to test its
influence on intention and attitude, where it was found to be non-significant. The
TAM provides a foundation for tracing the impact of external factors on beliefs,
47

attitudes, and intention to use technology. The TAM model (Figure 2.7) posits that
user acceptance and usage determine behavioural intention, which is affected by an
individuals attitude toward using the system and the perceived usefulness of the
system. Additionally, attitude and perceived usefulness are influenced by perceived
ease of use.
Figure 2.7: Technology Acceptance Model (TAM)




Source: Davis et al. (1989:985)
Davis (1989:320) defines perceived usefulness and perceived ease of use below:
Perceived usefulness (PU) is defined as the prospective users subjective
probability that using a specific application system will increase his or her job
performance within an organisational context (Davis et al., 1989:985). In the
literature, perceived usefulness has emerged as the key determinant of
acceptance and usage behaviour (Venkatesh and Davis, 2000).
Perceived ease of use (PEOU) is defined as the degree to which the
prospective user expects the target system to be free of effort (Davis et al.,
1989:985). Generally, technologies that are perceived as easy to use are more
likely to be adopted than technologies that are perceived as too hard to
understand or use.
Similar to the TRA, the TAM suggests that technology usage is closely determined by
behavioural intention, which is in turn viewed as being jointly influenced by an
individuals attitude toward using the system and perceived usefulness of the system,
with relative weights statistically evaluated by regression. The attitude and intention
relationship suggested in the TAM implies that, if the consequence of the behaviour
seems beneficial to the individual, he/she forms an intention to participate in the
behaviour. The attitude and intention relationship in the TAM was adapted from the
TRA. The TAM suggests that perceived usefulness is related to behavioural intention
in that an individual forms intentions to perform the behaviour that he/she believes
will increase his or her job performance. A plausible instrumental reason for this
enhanced performance is reward, such as pay increase and promotion (Davis, 1989).
The TAM postulates that perceived usefulness has a significant effect on behavioural
intention over and above the attitude factor. Furthermore, the TAM suggests that both
perceived usefulness and ease of use constructs have significant correlations with
48

attitude. Regression analysis indicated relative weights of each construct (Davis,
1989).
According to Davis (1989), perceived ease of use determinants are underscored by
two basic mechanisms by which it influences attitudes and behaviour: self-efficacy
and instrumentality (Venkatesh and Davis, 2000; Davis, 1989). On the one hand, self-
efficacy is one of the main factors behind intrinsic motivation. It refers to individuals
beliefs about their ability and motivation to perform specific tasks (Bandura, 1986). In
the field of IT particularly, the easier a system is to use, the greater should be the
users sense of efficacy (Bandura, 1986) and personal control regarding the users
confidence in their ability to behave successfully in the situation (Lepper, 1985). On
the other hand, perceived ease of use could also be instrumental, contributing to
improved user performance. Effort is a finite resource that a user may redeploy to the
various activities for the same effort (Radner and Rothschild, 1975; Venkatesh, 2000).
Efficacy determinants are thought to operate autonomously from instrumental
determinants of behaviour (Chung, 2005).
In addition, perceived ease of use has been found to be a fundamental antecedent to
perceived usefulness, and it has been reported that ease of use explains a greater
amount of variance in usefulness, because perceived ease of use contributes to
improved performance (Davis, 1989; Venkatesh et al., 2003; Avlonitis and
Panagopoulos, 2005). Therefore, perceived usefulness can be influenced by external
variables over and above perceived ease of use (Davis, 1989). Taylor and Todd (1995)
suggested additional antecedent constructs that underscore technology adoption.
Additionally, researchers found perceived ease of use was relatively less salient in
determining usage behaviour than perceived usefulness (Davis, 1989). Similar to the
TRA, the TAM suggests that the effect of external variables on intention is mediated
by two key beliefs: perceived ease of use and usefulness. Concerning external
variables, Davis et al. (1989) argued that they provide the bridge between internal
beliefs, attitudes and intentions stimulated in the TAM and individual differences,
situational restrictions and managerially controllable interventions that have an effect
on the behaviour.
The TAM explained that the influence of external variables is mediated through user
beliefs and attitude. Numerous studies obtained in work related to information
technology have sought to explain the TAM's comprehensive influence across a broad
range of information systems in a variety of contexts, and have identified various
external variables and factors which correlate with perceived ease of use and
perceived usefulness. However, the findings of such studies tended to differ in their
identification of external variables related to a variety of technology, target users, and
context (Moon and Kim, 2001). Researchers found the TAM model useful in
providing a framework for investigating the significance of external variables on
technology acceptance and usage (Hong et al., 2001). Studies have represented
various external variables including individual differences, situational constraints,
system features and organisational support affecting behaviour (Igbaria et al., 1995;
49

Hong et al., 2001). Technology experience, training, and support are some of the
external factors which have been acknowledged as antecedents of perceived ease of
use in some technology adoption studies. However, system features are some of the
factors specifically intended to enhance usability, such as content of the system,
screen design, and touch screen (Davis, 1989).
With the increasing use of technologies has come the increasing interest of
researchers in examining and explaining user acceptance of technology. Over the last
two decades, strong empirical support has been accumulated in favour of the TAM
(Venkatesh and Morris, 2000; Hong et al., 2001). Researchers stated that the TAM is
the most influential model in explaining technology adoption (Mathieson, 1991).
Recently, the TAM has been applied and extended to examine individual acceptance
and usage of information technology in different contexts such as CRM (Wu and Wu,
2005), marketing (Chen et al., 2000), website and electronic commerce (Gefen et al.,
2003; Van der Heijden, 2003; Eriksson et al., 2005), e-mail (Szajina, 1996), e-
banking (Lai et al., 2010), wireless internet via mobile phone (Lu et al., 2003), data
management systems (Szajina, 1994), e-collaboration (Dasgupta et al., 2002),
microcomputer usage (Igberia et al., 1995), spreadsheets and voice mail (Adams et
al., 1992), online help desks and new multimedia systems (Venkatesh, 2000), e-
learning (Abbad et al., 2009), and digital libraries (Hong et al., 2001). The TAM has
also been applied across different cultures (Gefen, 1997; Gefen et al., 2000).
d) TAM2
Since across several studies, perceived ease of use was found not to be an
underpinning driver of usage behaviour, few studies have been conducted to examine
the determinants of perceived ease of use (Venkatesh and Davis, 1996). On the other
hand, PU has been observed as consistently having a strong determinant of usage
intention (Venkatesh and Davis, 2000). Therefore, Venkatesh and Davis (2000)
developed a theoretical extension of the TAM, the TAM2 which includes social
influence and cognitive determinants in examining the antecedent of perceived
usefulness. The TAM2 provides a detailed explanation of the beliefs underlying the
antecedent of perceived usefulness, explaining up to 0.6 of the variance in behaviour
as being linked to intention. The TAM2 extended the TAM to encompass subjective
norms, image, job relevance, output quality, result demonstrability, and perceived
ease of use as determinants of perceived usefulness (Figure 2.8). Attitude construct
was dropped as a variable because it had been found to only partially mediate the
effects of key beliefs on behavioural intention (Venkatesh, 2000; Venkatesh and
Morris, 2000).
In addition to including social influence and cognitive instrumental constructs to
examine the antecedent of the PU, the TAM2 also used experience as a moderating
variable. The TAM2 revised the original TAM to reflect the impacts of three
interrelated social forces on an individual adoption of technology: subjective norms,
voluntariness, and image. Subjective norm is consistent with the TRA, defined as the
50

degree to an individual thinks that others who are important to him/her think that
he/she should perform the behaviour. Voluntariness reflects the extent to which
potential adopters perceive the adoption decision to be non-mandatory. Image is the
degree to which one perceives the use of technology as a means of enhancing ones
status within a social group. According to Venkatesh and Davis (2000), only when
system use is perceived as mandatory does subjective norm have any direct effect on
intention, over and above the PU and PEOU. Voluntariness significantly moderates
the direct effect of subjective norm on intention to use. The TAM2 found that
subjective norms have a positive influence on image, and they both have influence on
the cognitive belief of perceived usefulness. In other words, an individuals perception
on usefulness is seen as likely to increase in response to persuasive social information.
Venkantesh and Davis (2000) also considered the influence of users experience on
these relationships. They found that an individuals increased experience with the
system will lessen the influence of subjective norms on perceived usefulness and
intentions to use the system. That is, over time a users experience may supplant the
reliance on the subjective norm as a basis for perceived usefulness and intentions to
use the system.
Beyond the social influence determinants of PU and intention to use, the TAM2
suggested that there are four cognitive instrumental determinants of PU: job
relevance, output quality, result demonstrability, and perceived ease of use, relative to
the original perceived usefulness construct in the TAM. Job relevance reflects an
individuals judgment as to how the target system is applicable to his/her job function.
Output quality reflects how well the system performs tasks that match the users job
description. Result demonstrability is defined as tangibility of the results of using an
IT system (Moore and Benbasat, 1991). The definition of PEOU in this extended
model is similar to the definition in the original TAM. According to Venkatesh and
Davis (2000), all cognitive determinants will be significantly related to the PU
construct, as shown in Figure 2.8. Researchers have suggested that the TAM2
improves understanding of the effective of cognitive processes on PU of a technology
(Hart et al., 2007).








51

Figure 2.8: Technology Acceptance Model 2

Source: Venkatesh and Davis (2000:188)
Recently, researchers have tested and extended the TAM model to explain CRM
adoption within organisations (Avlonitis and Panagopoulos, 2005; Schillewaert et al.,
2005), extending the TAM model to include the effects of individual characteristics,
personal innovativeness, organisational support, social influences, technology
experience, and computer self-efficacy. The model also confirms the role of PU as a
fundamental driver of CRM adoption, and PEOU as a secondary driver in determining
usage behaviour.
Avlonitis and Panagopoulo (2005) suggest that the most prevailing influence on CRM
acceptance comes from CRM perceived usefulness, followed by the setting of
accurate expectations regarding system usage, the salesperson's innovativeness
towards new technological tools, the CRM perceived ease of use, and the
management's encouragement and support. According to Jegham and Sahut (2004),
organisational and operational support has a direct and indirect effect on employees
acceptance of CRM system. However, user experience, training, and task autonomy
are not found to have influence on users acceptance of CRM. Studies have suggested
that organisations adoption of technology is influenced by technological,
organisational, and environmental factors. Moreover, organisations with greater
perceived usefulness are predicted more likely to become adopters of CRM system
(Ramdani et al., 2009).
Although the TAM is an empirical and useful model for explaining IS usage
behaviour, it has been suggested that it is insufficient for understanding an
organisation's adoption of CRM (Wu and Wu, 2005; Tung, 2006); the adoption of
CRM involves employees acceptance while is also related to the diffusion of
organisational use. Therefore, several researchers have combined the TAM with
Innovation Diffusion Theory (IDT) to suggest guidelines that may assist CRM
adoption within organisations. This suggests that using a hybrid technology
Norms
Behavio
ur
Use
52

acceptance approach as a theoretical framework will help businesses and researchers
to better understand why people adopt/resist using the CRM information system, to
predict how individual users will respond to the CRM, and to increase their
acceptance by improving the processes with which CRM is implemented (Tung et al.,
2009).
e) Innovation Diffusion Theory (IDT)
Innovation Diffusion Theory (IDT) is also known as Diffusion of Innovation (DOI).
The IDT model, comprehensively developed by Rogers (1962, 1983, and 1995), has
been applied across various disciplines such as anthropology, sociology, education,
communication, marketing, management and geography (Rogers, 1995). According to
Chen et al. (2000), IDT is one of the primary theories applied in technology
innovation. The main elements of the process of diffusion of innovation are:
innovation as an idea, a product, a technology, or a program that is new to the
adopters, whereas diffusion is the process by which an innovation is communicated
through certain channels over time among the members of a social system (Rogers,
1995:5). The IDT suggested that the adoption process of a decision-making unit and
the way it is approached lie as fundamental to the diffusion paradigm. The innovation
adoption process is defined as the process through which an individual or other
decision-maker unit passes from first knowledge of an innovation, to forming an
attitude toward the idea, and to confirmation of this decision (Rogers, 1983:163).
The adoption decision unfolds as a series of stages, flowing from knowledge of the
existence of the innovation through persuasion, decision, implementation, and
confirmation. During the knowledge stage an individual becomes aware of an
innovation. In the knowledge phase an individual begins to gain an understanding of
the innovation. Researchers have suggested that during the knowledge phase the
individual is influenced by personal characteristics, socioeconomic factors, and access
to mass media (Wood and Swait, 2002). In the persuasion phase, an individual
attempts to judge the salient characteristics of the innovation, and forms an attitude
towards the innovation. The decision stage has an outcome according to whether there
has been a decision to adopt or reject the system. At the implementation stage, an
individual acts on his/her decision. Finally, at the confirmation stage, an individual
reflects on the innovation decision and implementation process and reassesses the
adopt/reject decision. Rogers (2003) states that the adopters of any innovation can be
classified into five categories based on their innovativeness: innovators, early
adopters, early majority, late majority, and laggards.
The IDT suggests five factors that influence the adoption of an innovation: relative
advantage, compatibility, complexity, trialability, and observability. Relative
advantage reflects the individual perception that an innovation will be better than its
predecessor. Compatibility is the extent to which an innovation is perceived as similar
and congruent with existing values, needs, and past experiences. Complexity refers to
the extent to which an innovation is perceived as difficult to comprehend and use.
Trialability reflects the extent of accessibility to the innovation for experimentation
53

before individual adoption. Finally, observability is the extent to which the
innovations results are available and visible to an individual.
In the field of IT adoption, Speier and Venkatesh (2003) used a variety of theories
including IDT and TPB, to examine salespeoples acceptance of sales force
automation (SFA) technology. They proposed a comprehensive model and found that
not all innovation factors arose from the IDT drive usage of the SFA tools. In
addition, Wu and Wu (2005) integrated the TAM with IDT and empirically concluded
a number of guidelines to improve diffusion of CRM in organisations. They found
that both complexity and compatibility had indirect impact through the mediator of
relative advantage on CRM adoption, and argued that relative advantage played a
significant role in predicting employees adoption of CRM. Some other studies have
proposed an integrated model, which incorporates organisational and technological
factors, and have used the IDT to explain the technological factors of CRM adoption
(Hung et al., 2010).
2.6 CRM Adoption from the Management Perspective
Within management theory, CRM can be defined as a management approach that
includes identifying, attracting, developing and maintaining long-term successful
customer relationships in order to increase the retention of profitable customers
(Bradshaw and Brash, 2001; Massey et al., 2001; Stefanou et al., 2003). Recently,
research into the critical factors that influence successful adoption of CRM has
continued to attract management scholars such as Ocker and Mudambi (2003) and
Srinivasan and Moorman (2005). From a management perspective, businesses are
concerned with organisational issues related to CRM business strategy development
and implementation, and the role of employees and the organisation in managing the
adoption of CRM. The review of the literature suggests that these organisational
issues may also include strategic planning, culture and leadership, internal marketing,
and project management.
2.6.1 Strategic Planning
Business strategy entails identifying clear future directions to create competitive
advantage faster than competitors (Payne, 2006). Several researchers have framed
their argument in terms of shifts in management paradigm (Gale, 1994; Sheth, 2005).
Understanding and responding to customers needs, and raising the level of quality
and service have become imperative elements of corporate business strategy. Over the
last decade, a highly competitive marketplace has brought pressure on businesses to
reduce costs, while consistently being customer-centric. Hence, organisations have
adopted CRM systems to support these strategies. According to Day and Wensley
(1983), the position of marketing within organisations has been eroded or displaced
by the development of strategic planning. Strategic planning is defined as a process
of developing and implementing a course of action or direction that an enterprise
should take to achieve its objectives. Chaffey (2008) explains that CRM is a strategy
supported by technology, not a tactic; rather, it involves substantial restructuring of
54

organisational elements and processes, often planning strategic organisational change,
with an aim to maximising the value of relationships with company customers. In
such a case, strategic planning processes need to be adapted for the new customer-
centric philosophy (Gurau et al., 2003).
Recently, researchers have noticed that the adoption of CRM is not an easy process,
since it is deeply embedded in other business processes (Harrigan et al., 2011).
Therefore, they have suggested that the CRM strategy must be incorporated within a
wider context of business strategy formulation and implementation process
(Reynolds, 2002; Ballard, 2008). Accordingly, CRM adoption involves identifying
and planning all strategic processes that take place between a business and its
customers. Based on this, it has been found that strategic planning at corporate level
can help businesses to maintain a strategic fit between business strategy and CRM
adoption (Ocker and Mudambi; 2003; Foss et al., 2008; Meadows and Dibb, 2008).
Strategic planning has been defined as a process of developing and implementing a
course of action or direction that an enterprise should take to achieve its objectives.
The strategy is the course of action while the plan is the detailed set of tasks to
achieve the objectives (Cory, 1988:5). Researchers have suggested that a strategic
plan is needed for the success of CRM practice in an organisation, as it plays a key
role in forming the organisations behavioural activities towards customers and
creating an environment that is conductive to CRM implementation (Day, 2002).
Hence strategic planning must consider the fundamental business values and
contribute to the shift from product-centric to customer-centric approach (Gurau et al.,
2003; Ballard, 2008). Consequently, in order to ensure CRM success, management
need to emphasise customer-centric philosophy at different phases of the strategic
planning process, and to highlight CRM objectives and drivers.
According to Ocker and Mudambi (2003), a strategic plan should drive the business
unit plans and IT plans; IT executives who participate more in business planning
believe they have a better understanding of a top managements objectives than those
who participate less. A strategic plan is also needed to ensure that organisations have
clear objectives, goals, and an implementation plan in order to keep the organisation
engaged, focused and effective (Chen and Chen, 2004; Osarenkhoe and Bennani,
2007). Gurau et al. (2003) has suggested that the strategic planning process needs to
adapt the new customer-centric philosophy. Reynolds (2002) and Payne (2006) agree
that a strong strategy is a prerequisite to focusing CRM solutions on business
objectives which will yield the highest return on investment. According to Brown and
Vessey (2003), CRM adoption should also enable strong support among senior
management, in order to create an organisational environment that is conducive to
effective implementation of CRM strategy across the organisation. Researchers
conclude that businesses actively engaging in a strategic planning process achieve
financial improvement, whereas business not utilising strategic planning show no
improvements in financial performance (Gurau et al., 2003; Ocker and Mudambi,
2003; Foss et al., 2008).
55

The strategic planning process offers a coherent framework for allocating
organisational resources, managing challenges, exploiting opportunities, and
evaluating CRM and business performance (Bohling et al., 2006). Batenburg and
Versendaal (2007) suggest that a critical success factor of CRM implementation relies
on the alignment of CRM with business strategy, organisation and process,
monitoring and control, information technology, and employee and culture. Therefore,
organisations always need to locate the interrelationships among CRM activities and
their business strategy and goals (Kim and Hwang, 2003), especially since the
analysis of such interrelationships can lead to deeper insights into the effectiveness of
CRM, not just to clarify what should be done to achieve better outcome, but also to
help senior management and marketers to determine their CRM strategy.
Consequently, it has been found essential for organisations to cover CRM activities in
their performance measurement systems, in order to assess the operation of their
vision and the reliability of the strategic plan formulated to adopt CRM systems.
The success of strategic planning depends on aligning business processes across the
organisation to maximise customer values, leading to better financial performance.
Consequently, businesses are re-engineering their strategies to meet the evolving
needs of customers and incorporate CRM into their business strategy. Gurau et al.,
(2003) outline how the strategic planning process for customer-centric business may
involve market research, planning and implementation phases. Market research should
analyse the historical relationship with customers, segment customers based on their
needs, calculate customer lifetime value, create segment specific strategies to fulfil
customers needs, and update future business plans based on feedback and analysis.
During the planning phase, businesses need to create multi-functional teams, agree on
specific objectives for value creation, and provide a detailed implementation plan. The
implementation phase should implement operational procedures, measure results, and
adjust plans according to results obtained. Therefore, the strategic planning process
has developed a coherent framework for allocating organisational resources,
managing challenges, exploiting opportunities, and evaluating CRM and business
performance (Ryals and Knox, 2001; Rigby et al., 2002; Raman et al., 2006).
2.6.2 Internal Marketing
Much of the marketing literature focuses on customer-centric requirements (Chen and
Popovich, 2003) and a strategic shift from product-centric to customer-centric
orientation. In this, adoption of CRM is a vital process for organisations to be more
effectively customer-centric. However, some researchers argue that CRM adoption
can only be effective when the business redesigns its structures, processes and
incentives to accommodate the process (Frambach and Schillewaert, 2002). The
leading exponents of CRM adoption have cautioned us as to the kinds of
organisational and communication issues which may potentially hinder the effective
adoption of CRM (Cascio et al., 2010), indicating that internal marketing plays a vital
role in resolving issues in relationship marketing and CRM implementation
(Christopher et al., 2002). Grnroos (1981), a vigorous leader of the Nordic school,
56

stresses that effective relationship marketing is only attained by organisational
practice of internal marketing which generally involves creating an appropriate
organisational climate.
Ballantyne (2000) defines internal marketing as any form of marketing that focuses on
changing employees attention to the internal activities of the company, in order to
successfully implement marketing plans. The basic premise behind internal marketing
involves improving customer awareness and quality, and removing human barriers to
business effectiveness. There are a number of different forms of internal marketing.
These all forms interrelate in considering the customer as inside the organisation; the
employee in this study. Internal marketing has been seen as a means of affecting
organisational change and implementing marketing strategies (Piercy and Morgan,
1990; Ballantyne, 2003). According to Sin et al. (2005), internal marketing process
involves market training and education, internal communication, reward systems, and
employee involvement. In the literature, researchers have used internal marketing
terms to conceptualise the development of customer-centric orientation, employees
involvement, management support, and changing management issues.
Internal marketing is a pivotal strategy to develop customer-centric orientation and
facilitate coherent understanding of relationship marketing essentials (Sheth and
Parvatiyar 2002; Lings, 2004). According to Krauss (2002), employees are the critical
components of customer relationships, and the most difficult element to engage in
customer-centric organisational change. The concept of internal marketing is also
concerned with ensuring communication between employees, and their engagement
with business and CRM strategy (Hwang and Chi, 2005). Internal marketing is
directed at motivating employees to be involved in the processes of implementation
and integration of technological advances and organisational change in customer-
centric processes (Chen and Popovich, 2003). As such, there is a strong need for
businesses to motivate and influence employees to adapt to the internal process as
needed for effective CRM implementation (Chen and Chen, 2004; Galbreath and
Rogers, 2012). This is important for organisational development and change, as it
reduces employee resistance towards change process and adaptation, whilst improving
business performance through the creation of strong organisational culture (Grnroos,
1996). This can be attained by the efficient interaction between management and
employees, since intensive and high quality communication better informs employees
about the nature of internal and external environment changes and pushes them to
understand the need of change. In relation to CRM, this includes not just actions but
also behaviours and attitudes to the customer-centric orientation of the business
(Ryals and Knox, 2001; Chen and Popovich, 2003).
CRM implementation may be challenged by varying perspectives and attitudes of
employees from different business units within an organisation. In order to co-
ordinate these, researchers have suggested collaboration of cross-functional teams
from different business units (IT, Marketing and HRM) and management hierarchies
in devising an internal CRM based marketing process, which will align the different
57

perspectives of CRM across business units within the organisation (Ryals and Knox,
2001; Payne, 2006). This suggests that internal marketing as a concept can be
extended to creating an organisational climate with cross-functional working quality
(Ballantyne, 2000).
Internal marketing must ensure the management support of such a devised CRM
marketing plan, as previous research findings indicate that CRM implementation
efforts are successful only when there is adequate top management support,
communication, and knowledge sharing (Goodhue et al., 2002; King and Burgess,
2007; Osarenkhoe and Bennani, 2007). Furthermore, Payne (2006) highlights that a
supportive management culture underpins any established CRM strategy and
customer-centric values, which will be one that serves cross-functional working
across the organisation. The main characteristics of supportive culture and cross-
functional working are discussed in more detail later in the culture and leadership
section.
Winer (2001) suggests that the influence of change management on CRM success is
to date largely under-investigated. Therefore, internal marketing must carry forward
HRM perspectives on aspects of change management into the marketing domain.
Empirical evidence from studies shows that CRM projects suffer from high failure
rates where businesses neglect change management principles, or ignore the potential
impact of substantial change in organisational culture and employee involvement
(Kale, 2004; Plakoyiannaki; 2005; Payne, 2006). This suggests that the move towards
CRM adoption must be supported by a means of analysing organisational problems,
such as the Seven S framework. According to Payne (2006), the Seven S
framework, developed by McKinsey, is a powerful instrument for examining CRM
change management initiatives. This framework includes seven elements: strategy,
structure, system, style, staff, skills, and shared values to address all possible issues of
organisational change and drive an organisation to excellence. In addition to these,
researchers suggest that change management efforts could be aided by effective
internal communication between employees across the organisation (Chen and
Popovich, 2003). Finnegan and Currie (2010) have defined good internal
communication as involving improved information sharing within and across the
organisation, creating an integrated view of the customer, and aligning a unified
message to cope with external communication with customers. According to Ryals
and Knox (2001), CRM adoption and organisational culture change require enhanced
quality of internal communication within an organisation. Consequently, managers are
urged to communicate clear objectives in driving forward CRM strategy, since
understanding of objectives is critical to shaping the perceptions of employees across
the organisation (Ramdani et al., 2009). A clear understanding of the objectives and
drivers of CRM would help employees to realise the strategic importance of CRM in
the organisation and what they are expected to achieve through the CRM process
(Plakoyiannaki, 2005). Given that the achievement of CRM goals rests on employees'
understanding of CRM initiatives and processes, the best strategy for building
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employees' understanding of motivation for a new working environment is the
creation of internal forums for cross-functional communication (Osarenkhoe and
Bennani, 2007). To this end, Raman et al. (2006) have argued that senior managers
should show commitment and support to building a team orientation and bringing
various units of the company together.
The implementation of CRM strategy has required a shift to a culture of more freely
sharing information and knowledge (Finnegan and Currie, 2010). Ryals et al. (2000)
have described CRM adoption also as a change programme, which requires
management support, new information systems to re-configure businesss processes,
and alignment of rewards and measures to shape the behaviour of employees
motivating them to excel in customer service. Moreover, organisations have been
recommended to use their rewarding system to monitor employees behaviour (Lopez
et al., 2006). Literature shows that CRM implementation is aided by the
organisations use of a reward system to boost motivation of the employees and
reduce their resistance to change (Reintarz et al., 2004; Plakoyiannaki, 2005). In
particular, organisations offering incentives strongly oriented towards retaining, rather
than capturing customers, are seen to be engaged in developing a very customer-
centric culture (Day, 1999). According to Plakoyiannaki (2005), reward systems
should acknowledge and reward the contribution of employees, since it is they who
can best influence outcomes on the job. Such rewards are likely to result in an
enhanced sense of impact, and to reinforce perception of personal competencies.
Finally, successful CRM implementation needs an organisational structure and a
reward system that serve CRM initiatives rather than undermining them. For example,
an organisation needs to have a way of measuring and rewarding customer
satisfaction, which can be attained directly through surveys, or indirectly through
monitoring proxy measures (Day, 1999).
2.6.3 Organisational Climate, Culture and Leadership
Organisational Climate
Organisations increasingly aspire to pursue creative ideas and approaches to be more
competitive. They seek to encourage creativity by developing a working environment
that is conducive to innovation, change and continuous learning orientation. While the
capabilities of an organisation to react quickly and support new innovative solutions
must start at individual level, evidence suggests that these capabilities are impacted by
a variety of organisational variables such as organisational climate and culture
(Trainor et al., 2011). Both of these variables are proved to be useful in explaining
how organisations influence the attitudes and behaviour of organisational members,
why some organisations are more innovative and more willing to adopt new
technologies, and why some organisations are more successful than others (Glisson
and James, 2002).

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The two concepts of organisational climate and organisational culture, although
described as conceptually district, are closely interconnected forming dynamic
interrelationship. Schneider et al. (2011) state that despite the overlap and similarities
between these two concepts, limited research has looked at the relationship between
them. Although climate has a longer history in the literature, culture received more
attention in recent literature (Glisson, 2009). As a result, the term organisational
culture has gradually replaced the term organisational climate. These two terms are
two alternative constructs for conceptualising the way people experience and
describe their work settings (Schneider et al., 2011:2). Moreover, Moran and
Volkwein (1992) concede that climate is a subset of culture. In the context of CRM,
Payne (2006) approves that a supportive culture serving CRM implementation should
include elements of a positive organisational climate.
In a bid to avoid confusion between organisational culture and climate, Denison
(1996) recommends to use the term organisational culture to refer to the deep
structure within an organisation, which is rooted in the values, assumption and beliefs
held by organisational members, whereas to use the term organisational climate to
refer to elements of an organisational environment as being perceived by
organisational members. In other words, climate is the way organisational members
perceive and interpret culture quality and characteristics (French et al., 1985,
Armstrong, 2009). Hence, it could be argued that culture is concerned with the traits
and features of the actual organisational settings, while climate is concerned with
individuals perception of this setting. French et al. (1985) concede that it is more
difficult to identify the characteristics of the actual settings (culture) within an
organisation especially when individuals perceptions (climate) represent different
perspectives of the organisational settings. The point is that, in contrast with culture,
climate can be empirically assessed (Moran and Volkwein, 1992).
In his attempt to clarify the differences between culture and climate, Glick (1985)
considers the differences between applied methodologies, especially because the two
concepts are drawn from different disciplines. The concept of climate is rooted
primarily in the field of social psychology, while the concept of culture is rooted
firmly in the field of anthropology. Evidently, both disciplines address different levels
of reality and need different research paradigms and methodology (Denison, 1996).
Moreover, Denison (ibid) contends that both of culture and climate address a common
phenomenon, focusing on the development and influence of social contexts within an
organisation. However, differences between them rely principally on interpretation
rather than differences in phenomenon (Moran and Volkwein, 1992).
The concept of organisational climate is defined as the employee perceptions of the
organisational environment including policies, features, events, and processes
(Schneider, 2008). Morgan (1991) state that organisational climate is concerned with
mood or atmosphere within an organisation. Moran and Volkwein (ibid: 20)
describe organizational climate as a relatively persistent enduring quality of an
organisation, which differentiates it from other companies. They further argue that
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organisational climate i) embodies members perception of organisational practices,
ii) is a result of internal interaction, iii) serves as a basis for interpreting the situation,
iv) reveal the predominant norms and attitudes of the organisational culture, v) and
acts as a stimuli for shaping behaviour.
Trainor et al. (ibid) suggest that appropriate climate and culture within an organisation
is crucial for facilitating e-marketing and, more specifically, CRM. Clark and Smith
(2003) argue that organisations should coordinate their efforts to align organisational
climate with organisational culture to enable more effective adoption of CRM.
Organisational climate is a determinant of individuals behaviours within an
organisation and further reflects organisational values. It is described in the literature
as a critical means to achieve customer satisfaction (Yagil and Gal, 2002), customer
retention (Clark, 2002), and service quality (Schneider et al., 1998). It is therefore
prudent to consider organisational climate as a critical determinant in how
organisations relate to customer-centric orientation for the service sector context
(Schneider and Bowen, 1995). This has important implications not only for the
adoption but also the sustainability of CRM. Researchers stress that the quality of
organisational climate is a key determinant of CRM adoption (Goodhue et al., 2002;
Payne, 2006). Hence, by developing an appropriate organisational climate that
nurtures CRM initiatives and facilitates diffusion of innovation, management can
considerably boost CRM adoption. Organisational climate manifests a wide range of
characteristics and factors. However, progress in this area of research (Clark, 2002;
Schneider et al., 2011) suggests that a range of elements could be accommodated
from there to the context of this study: customer-focused (Chen et al., 2009c; Garrido-
Moreno and Padilla-Melendez, 2011), rewards (Clark, ibid), appropriate learning
climate (Payne, 2006), and cross-functional team-working (Clark and Smith, ibid).
Organisational Culture
CRM adoption is successfully achieved only if organisations craft the right culture
and attitudes of employees around it (Gupta and Shukla, 2002). It would appear that
the people element involved in organisational culture and leadership is critical in
actively supporting CRM implementation, and improving customer and shareholder
values (Goodhue et al., 2002; King and Burgess, 2007; Osarenkhoe and Bennani,
2007). CRM adoption can be challenged by a resistance to change at various levels of
the organisation (Bohling et al., 2006) and to overcome these challenges a high level
of top management commitment to overcome employees resistance to change is
essential (Zablah et al., 2004). In addition, organisations which are open to accepting
innovation and embracing learning culture tend more readily to support CRM
adoption (Payne, 2006). Given this literature, in this study the author divides this
conceptual factor further into three sub-factors: Resistance to change (Goodhue et al.,
2002), Supportive organisational culture (Boulding et al., 2005; Payne, 2006), and
Leadership (Ryals and Knox, 2001).
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Given these factors, it has become essential for managers to assess and understand
how CRM goals fit within an organisations culture and values. A study by
Deshpande et al. (1993) suggests that organisational culture reflects deeply embedded
sets of values and beliefs within an organisation, which serve to establish the norms
for appropriate behaviour within that organisation. Since organisational culture exists
within all organisations, it can be seen as one of its potential competencies. The type
of organisational culture which develops will reflect the history of its being
established, its development over time and the environmental influences which have
impacted upon it (Hall et al., 2001). Organisational culture shapes the characteristics
of human resources and the degree of readiness to change in the organisation
(Minguzzi and Passaro, 2001).
Thus the complex nature of CRM necessitates creating the right environment, culture
and attitudes of employees. Furthermore, CRM adoption is achieved only if specific
advanced technology skills are attained, together with significant changes in work
practices and structures (Ramdani et al., 2009). This explains why CRM adoption can
be challenged by employee resistance to change and innovation at various
organisational levels (Bohling et al., 2006). Hence, managers need to respond
promptly to such concerns and resolve them at the early stages of CRM
implementation (Bull, 2003). Moreover, the personal characteristics of management
are found to have a direct impact on the changes in an organisation, as personal
characteristics of managers might affect the adoption of changes. Several studies have
investigated the social behaviour and frames of reference of top management
personnel when adopting innovation (Thong and Yap, 1995; Riemenschneider and
McKinney, 2002). Numerous studies show that the more top management are seen to
value and understand an innovation, and advertise their positive attitude towards IT,
the more rapidly and successfully an innovation is likely to be adopted (Fuller and
Lewis, 2002; Bassellier et al., 2003; Nguyen, 2009). This suggests that in terms of
innovativeness, both general and IT-specific, the role of management is important,
because of its impact on the organisations innovation and motivation to change
(Premkumar and Roberts, 1999).
Adoption of CRM is a change within an organisation that affects the organisational
culture of that organisation and vice versa. The adoption of CRM initiatives can bring
in significant changes to organisational culture including the work practices of
organisations (Premkumar and Roberts 1999; Ali, 2007). In such a case, resistance to
the innovation itself and disagreements as to change among various departments, are
likely to result. Piderit (2000) indicates that resistance can be viewed as a
multidimensional attitude towards change, comprising types of beliefs, emotions, or
behaviours. Resistance to change can be articulated through the expression of
negative beliefs about the change, or displays of strong negative feelings about the
change, or actions or intentions to oppose the change effort. These three components
are not independent of each other. Of course behavioural resistance represents the
strongest resistance to an innovation, which can be mediated by management through
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use of internal marketing methods. In the context of CRM adoption, behavioural
resistance is the manifestation of employees unwillingness to adopt and utilise CRM
tools properly (Zablah et al., 2004).
In adapting to CRM strategy and adopting CRM technology, it is very common for
organisations to be challenged by the change process. This is especially true for
traditional companies that need to change their focus from product to customer
(Boulding et al., 2005). Re-engineering a customer-centric approach involves cultural
changes which can be achieved through the participation of all employees within the
organisation. However, employees may react in different resistant ways to new ideas
and processes resulting from CRM implementation (Payne, 2006). Such employee
resistance to change at various levels of the organisation has been one of the major
factors found to hamper the success of CRM projects (Bohling et al., 2006).
Zablah et al. (2004) propose that this resistance may occur when the change is
considered as painful, or involving loss; and given the high level of uncertainty
normally generated by organisational innovation efforts, such resistance behaviour
can be seen as logical and predictable. Since the implementation of CRM initiatives
may imply significant changes to some jobs in an organisation, it would be normal for
employees to resist these initiatives (Ramdani et al., 2009), and to fear CRM as a
mere efficiency approach and cost cutting exercise to replace their contribution to the
organisation and cut their jobs (Bull, 2003). Buttle (2004) suggests that organisations
promoting a customer-centric philosophy to their culture may be able to render the
adoption of CRM less threatening to employees, especially if accompanied by an
appropriate reward system, compensation programs, and job evaluations on the basis
of facilitating and rewarding customer-centric orientation (Chen and Popovich, 2003).
According to Coltman (2007a), managers of CRM adoption should be sensitive to the
potential tension between perceptions of new CRM strategies, and existing forms,
systems and resources. Therefore, it is recommended that CRM adoption deploy a
champion who can conduct an analysis of the current organisations culture via
different types of techniques (i.e. management by walking about and surveys), and on
this basis, acts towards developing the desired new culture.
According to Boulding et al. (2005), little attention is given to the role of employees
in the successful implementation of CRM activities. Several studies suggest that
organisations which are open to accepting innovations, and embracing a new learning
culture, are more likely to advance technology and gain competitive advantage over
competitors (Hall et al., 2001). Additionally, Payne (2006) explains that a supportive
culture serving CRM implementation should include four elements: a positive
organisational climate, a customer-centric culture, a strong culture, and a learning
climate. Research also shows that employees ability to learn new ways of working
with customers (new processes and technologies) contributes to effective CRM
implementation (Galbreath, 2002; Mithas et al., 2005; Chalmeta 2006). A number of
scholars have emphasised that preparing businesses with a supportive organisational
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culture is paramount for CRM success (Goodhue et al., 2002; Chen and Ching, 2004;
Raman et al., 2006).
Overall, researchers suggest that CRM processing requires team working and a cross-
functional integration between people from different departments across the
organisation (Payne, 2006). The Anglo-Australian relationship marketing school
particularly highlights that organisations adopting CRM strategy needs a degree of
cross-functional reorganisation (Lindgreen et al., 2006). This is supported by
researchers who have suggested that a cross-functional working requires an
organisational culture that promotes effective collaboration and cooperation among
business units (Ling and Yen, 2001). However, others warn that a cross-functional
communication between IT and marketing departments is not an easy process, given
the different cultures they inhabit (Wilson et al., 2002; Payne, 2006). Consequently, a
product champion, as key facilitator in the CRM adoption process, should understand
how individual organisational activities may contribute to customer success, and how
individual commitment may be established to contribute to new processes and
techniques (King and Burgess, 2007).
Leadership
According to Schein (2004), the dynamic process of constructing and managing
organisational culture is the essence of leadership. Therefore, nurturing a supportive
organisational culture for CRM implementation is a continuous leadership task at all
organisational levels (Payne, 2006). Researchers have found that leadership and top
management commitment actively support CRM activities in a relevant matter
(Finnegan and Currie; 2010). This underpins the message that in order effectively to
implement CRM, organisations cannot hope merely to adopt CRM and then stand
back to watch from far. Even if the organisation is using the latest technology and
providing the atmosphere of innovation, employees may still not move forward
without daily motivation to accept CRM initiatives. Because CRM involves changing
employee attitudes and the culture of an organisation, top management support and
commitment is an essential factor affecting the success of CRM adoption. According
to Payne and Frow (2006), effective CRM strategy relies on management support and
having customer-centric values in place; this way a culture is created to support cross-
functional working across the organisation. Therefore, organisations should enable
strong support among senior management, in order to create an organisational
environment that is conducive to effective implementation of CRM strategy across the
organisation (Brown and Vessey, 2003).
A senior management team should view itself as a sponsor and champion for the
adoption of CRM as a major goal for the organisation. Researchers propose that
leadership from top management has played a critical role in CRM implementation,
by demonstrating full support across all levels of management for CRM strategy. In
relation to this, top management support has been found to be the biggest influencer
for maintaining transformation initiative and reducing change resistance, including
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enhancing employee motivation to become more customer-centric and reinforcing the
importance of IT management practice (Locander et al., 2002; Bohling et al., 2006;
Kennedy et al., 2006). Therefore, CRM adoption needs a champion who is able to
conduct analysis of the current organisations culture and then to act to develop the
desired new culture. It has also been noted that businesses that have CRM champions
are more proactive in heavy investment to ensure that CRM different initiatives work
together efficiently (Goodhue et al., 2002; King and Burgess, 2008).
Somers and Nelson (2001) stress that technological innovations often require the
presence of a champion who delivers the critical aspects of transformational
leadership, facilitation, and internal marketing of the project to the employees. This
champion needs to have a comprehensive and extensive understanding of both the
business and technology contexts. Hence, it is critical for CRM success to position a
champion high in the organisation; a senior manager with extensive knowledge of the
organisations processes and authority to move large and complicated projects
through the transition (Galbreath, and Rogers, 2012). This champion would enable
coordination of the diverse CRM developments and implementation stages across the
whole organisation, and promotion of the CRM objectives to various employees
within different departments. In conclusion, top management support is instrumental
in ensuring that CRM implementation receives the necessary resources, time and
priority. Unfortunately, some studies suggest that senior managers do not often
support CRM implementation. This is mostly due to the following reasons:
Short-term management orientation, ignoring that CRM adoption takes a long
time to achieve results (Ryals and Knox, 2001).
Managers relating mostly to quantitative financial results, failing to recognise
the potential benefits of CRM to organisation profitability (Ryals and Knox,
2001).
Managers failing to understand their critical role in supporting the change
process (Maklan et al., 2007).
Managers considering CRM implementation as a project rather than as a
holistic ongoing approach or process (Maklan et al., 2007).
2.6.4 Project Management
Project management can be defined as a practical professional capability framework
for delivering a project in a set time frame, meeting a given mission by organising a
dedicated project team, and effectively combining the most appropriate technical and
managerial methods (Gentle, 2002). The vast combination of technical elements
(hardware and software) and the myriad of organisational and employee issues make
CRM adoption/implementation projects vitally complex. For this reason, it is
impossible to disregard the role of project management techniques and skills in
determining successful CRM adoption. The lifecycle of the CRM system offered by
Marcus and Tanis (2000 as cited in Yang and Seddon, 2004) includes four phases:
chattering, implementation (project), shakedown, and onwards and upwards However,
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the Marcus and Tanis lifecycle model has been criticised for not including a definitive
stage of the use of the system (Chan and Rosemann, 2001). To counter this, Chan and
Rosemann (2001) have suggested using a lifecycle framework including selection,
implementation, use, and continuous change of the system. The two lifecycle
frameworks are similarly involved with both pre and post implementation phases.
This section focuses on the implementation phase, as the other phases seem to overlap
with other concepts discussed in this study (i.e. internal marketing, and culture and
leadership).
Project planning could be seen as an essential step in implementing CRM projects,
since without a project plan, CRM implementation risks experiencing issues such as
inadequate resources, unclear scope, poor scheduling, and the lost of quality control
(Man et al., 2006). Organisations need to identify CRM objectives and recognise their
priorities; such objectives should be derived from the corporate objectives and sustain
the overall business strategy. Accordingly, a project manager is advised to clarify the
goals of CRM project/projects and the means for measuring project performance
against these goals (Somers and Nelson, 2001). Clarification and implementation of
these goals can be seen to constitute the critical success factors of the project, to be
used as benchmarks for evaluating CRM initiatives. On the other hand, it must be
recognised that CRM projects are large-scale projects requiring attention beyond their
completion, as the true benefits of CRM are only recognisable once the initial projects
have been completed (Meyer, 2005).
According to Payne and Frow (2006), CRM credibility runs the risk of being
completely or significantly damaged, if a CRM project plan slips badly, for instance
coming to completion after original agreed deadlines or coming in over original
agreed budget. Thus realistic advance scoping of a project in terms of management
capacity is essential so that the planning of CRM objectives is clearly known to all
stakeholders; in this way the risk of overrunning budgets and timescales is minimized.
Hence, having appropriate project schedules, plans and a clear strategy for CRM
implementation is a necessity for CRM projects (Somers and Nelson, 2001; Ranjan et
al., 2008). In this, a project manager should be cautious of too broad or ambitious a
project scope, as sometimes initial commitments overlap or lack specifics (Somers
and Nelson, 2001).
Another factor which has received considerable attention among researchers is the
role of user training to facilitate and support CRM implementation (Schillewaert et
al., 2005). In the CRM literature, user training seems to be an element which overlaps
with project management and internal marketing concepts. Because CRM projects
entail technical, business and process changes, preparing and training users how to
work with CRM systems and how to relate to CRM processes is essential early in the
implementation phase. From an individual employee perspective, user training is
useful for coming to value and appreciate CRM as a palatable and compatible process
in line with their organisations objectives (Zablah et al., 2004). According to Somers
and Nelson (2001), large-scale projects like CRM projects appear to demand a six
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month learning curve, within which particular types of training are seen to improve
the steepness of the learning curve. The CRM adoption process is supported by user
training, which often includes two important elements, first, technical training which
supports employees' IS skills and second, employee understanding of CRM as
contributing significantly to the financial success of the organisation (Ryals and
Knox, 2001). Research shows that initial user training often supports employees
technical skills, although in itself insufficient to help employees value the
implications of CRM in relation to their organisational objectives (Bull, 2003).
Overall, user training needs to be complemented by collaboration and communication
flow within an organisation (Riseley, 2004). In addition user training should be
considered as a continuous method used throughout the CRM implementation
process, to reinforce existing procedures and to implement new organisational values
and processes (Payton and Zahay, 2005).
According to Reynolds (2002), project managers need to implement specific CRM
initiatives in order to achieve CRM goals. These initiatives include creating a multi-
functional project team, agreeing on specific objectives for value creation, providing
detailed implementation plans, providing appropriate training of users, laying out
clear milestones, carrying out monitoring, and motivating employees (Reynolds,
2002). The implementation plans should implement operational procedures, measure
results, and adjust plans according to results obtained during the implementation of
CRM projects (Bose, 2002; Ocker and Mudambi, 2003; Payne, 2006).
The use of good project management practices effectively underpins customer
management capabilities. This capability refers to the project management team's
ability to adjust project plans on an ad-hoc basis. Wilson et al. (2002) emphasise that
project management teams need to monitor and control CRM implementation, in
order to ensure flexibility and adjustments to unexpected changes. Additionally
Mckay (2009) highlights that an agreement before the start of the project as to the
distribution of milestones could facilitate the monitoring and control process.
However, because of the complex nature of CRM projects, project managers may face
difficulties in monitoring and adjusting project plans. Therefore, a CRM project plan
needs to embrace cultural change issues within the projects scope, and to design for
flexibility (Wilson et al., 2002). Researchers suggest that organisations with a cross-
functional team assembled from different departments react more rapidly and
constructively to changes than mono-functional teams (Gefen and Ridings, 2002;
Payne, 2006). This is because a cross-functional team is able more effectively to
communicate across IT and marketing departments. This results in maintaining
employee team commitment to the success of a CRM project which, in turn, may lead
to a better effective customised project that meets users requirements. Such good
communication management can increase the success rate of CRM projects, as it
would enhance stakeholder understanding of the project, thus obtaining their support,
and gaining their commitment to deliver the CRM project's results (Man et al., 2006).

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2.7 The Impact of Organisational Characteristics on CRM Adoption
There is considerable evidence to show the importance of organisational
characteristics in determining the CRM adoption (eg: Sin et al., 2005; Ko et al.,
2008). Barney (1992) describes organisational characteristics as the capabilities that
enable a firm to consider, choose, and implement strategies. Partanen and Mller
(2012) argue that resources and capabilities drive a firm ability to achieve competitive
performance. The view that resources and capabilities affect business process and
performance is well supported by the marketing and management scholars (Day,
2002; Prithwiraj et al., 2010; Partanen and Mller, 2012). The resource-based theory
provides a sound foundation for examining how resources can be managed to form a
competitive advantage. It emphasises the importance of resources and capabilities
(Teece et al., 1997). The basic underlying premise of this theory is that the value of
these two components is reflected in better business performance (ibid). The resource
based theory makes a distinction between its two main components: resources and
capabilities. The term resources is defined as stocks of available factors that are
owned or controlled by the firm, and the term capabilities is defined as the ability
of the firm to use its resources (Amit and Schoemaker, 1993). Resource-based theory
implies that organisations have different types of resources and varying levels of
capabilities (ibid). Moreover, businesses survival relies on their ability to create new
resources, build their capabilities, and make the resources and capabilities more
inimitable to facilitate superior performance (Teece et al., 1997; Partanen and Mller,
2012). Hence, the allocation of resources, by itself, cannot achieve sustainable
competitive advantage for an organisation, but how the organisation deploys it
existing resources and complements existing capabilities can improve its competitive
position (Peteraf, 1997; Nath et al., 2010).
The resource based theory has spread throughout strategic management (Amit and
Schoemaker, 1993). Within a relatively short span of time, it found a wide acceptance
in the marketing management literature (Day, 2002), and gradually in the information
system literature (Coltman, 2007b). In his review of the resource-based theory
development, Foss (2011) argue that this theory is micro-oriented, which has the
advantage of bringing strategic management closer with internal resources and
capabilities controlled by a firm. Gouthier and Schmid (2003) argue that the resource-
based theory has the potential to systematically analyse service customers and
customer relationships. Moreover, Coltman (ibid) concedes that this theory is a useful
multidimensional perspective to the adoption of CRM as it seeks to relate superior
performance to the unique various resources and capabilities possessed by the firm. In
developing a CRM capability, researchers suggest that CRM adoption requires
persistent synergistic investment in a combination of human, technological and
organisational resources and capabilities (Coltman, ibid; Partanen and Mller, 2012).
Yet, evidence suggests that CRM adoption is a selective process in which
organisations choose whether to make CRM the central drive of their strategies and
working process, or just another approach of change (Day, 2002). Concluding that
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both academics and researcher must address how resources and CRM capabilities
emerge, evolve, and change over time (Srivastava et al., 2001).
2.8 Summary
The complex nature of CRM creates differences in tactical emphasis and a lack of
agreement as to the precise definition of CRM (Pedron and Caldeira, 2011). Payne
and Frow (2005) use a continuum to define CRM from three different perspectives. At
a low level of detail, CRM is narrowly and tactically defined, while at a high level of
abstraction, CRM is broadly and strategically defined. The first perspective applies a
narrow and tactical outlook where CRM is accomplished through a defined
technology initiative project. Tactical CRM approaches tend not to gain top
management support, and are not embedded in business strategy and organisations.
This tactical perspective takes technology as its driving force, and describes CRM as
using data to drive marketing activities (Kutner and Cripps, 1997). It also looks upon
CRM as a marketing promotional activity linked to marketing databases focusing on
efficient selling of products and services (Winer, 2001). Researchers from the IT
discipline have contributed to this tactical CRM approach by providing guidelines on
how to make efficient use of the technology (Romano and Fjermestad, 2003). This
perspective also looks upon CRM as a marketing promotional activity linked to a
marketing database focusing on efficient selling of products and services (Winer,
2001). Tactical CRM tools include data mining, direct mailings and telemarketing
tools.
Strategic approaches apply a holistic approach to CRM, and embed it in a businesss
wider strategy. This strategic orientation of CRM links to customer-centric strategy
that aims to develop one-to-one relationship with customers. Through combining all
processes and functions of an organisation, CRM is used to manage customer
relationships by covering all customer contact points, with the aim of developing
value for the customer and profitability for the organisation (Parvatiyar and Sheth,
2001). Researchers from the business discipline have contributed to this perspective
by focusing on business strategy, relationship marketing, and customer-centric
orientation (Buttle, 2004; Gummesson, 2008). The implementation of strategic CRM
approaches are conducted through a long-term prospective, which does not only
predict changes to organisational structure but also organisational culture. Strategic
CRM tools include affinity programs and segmentation tools. Payne and Frow (2005)
are in favour of the strategic perspective of CRM, since it links CRM to a customer-
centric orientation strategy. This orientation should lead to focusing organisation
structure and culture around customers. Dibb and Meadows (2008) observe that the
differences between CRM perspectives reflect what they describe as a journey from
segmentation to customer relationship management.
The review of the literature has demonstrated that the concept of CRM is a joint
development between marketing, management and IT disciplines, where a
considerable overlap between the three disciplines appears to exist. For example,
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researchers from the IT discipline focus on CRM characteristics and usefulness,
which are linked to a certain extent to the elements of customer-centric orientation
that receive most attention from marketing researchers. The insights from these
disciplines and their overlaps are relevant for extending each disciplines perspective.
However, as a consequence of the different success criteria, each discipline appears to
have its own distinct view of what constitutes successful CRM implementation, as
depicted in Table 2.3.
Table 2.3: A List of Sub-factors for Each Factor in the Conceptual Framework

Marketing scholars view CRM as a concept that adds value to the customer. They are
primarily concerned with the essentials of customer-centric and relationship
marketing, as an effective business strategy. Given that, customer-centric orientation
places customer knowledge, interaction, acquisition, value, satisfaction, and retention
at the centre of the value creation process.
IT researchers focus on CRM usage and implementation factors (Wu and Wu, 2005).
They indicate that system use has a strong effect on employees adoption of CRM in
organisations, referring to the idea that employees must use the CRM system to
achieve the marketing goals which are often correlated with other constructs. A
number of studies have successfully adopted and extended the technology acceptance
model (TAM) developed by Davis (1989), to examine the acceptance of new
technologies in the CRM domain.
The management literature has focused on the notion that an appropriate CRM
adoption calls for considerable attention to organisational and communication issues
surrounding the development and implementation of business strategy, and the role of
the employees and the organisation in managing the adoption of the CRM. Overall,
researchers from this area propose that an organisations strategic plan, internal
marketing, organisational culture and leadership, and project management have the
strongest influence on the successful organisations adoption of CRM. In the next
chapter, the methodology choice will be discussed in detail.
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Chapter 3: Methodology
3.1 Introduction
Following on from the research question, which examines what factors affect CRM
adoption within organisations, and the multi-disciplinary review of CRM adoption
developed in the previous chapter, this chapter presents an account of the research
design. The research was designed in order to collect and analyse data appropriate to
addressing the research problem. The validity and reliability of any research depends
to a great extent on the appropriateness of the methodology and design selected by the
researcher. This chapter presents the research design and methodology employed in
this study. It begins by defining the parameters: that is that a research design serves as
a framework or blueprint for conducting the research, which details the procedures
necessary to obtain the required information to structure/design a study that will seek
possible answers to the research problem (Malhotra and Peterson, 2006). As a first
step, several philosophical research perspectives are acknowledged within which the
philosophical standpoint of the author is situated. To follow, a detailed discussion is
offered of different alternatives for research approaches, strategies, and methods,
leading to the specific choice made in this study. Finally, the summary of this chapter
is presented.
In this study, the following research cycle is employed to develop the research
conceptual model by: i) starting with an exploratory study (in-depth interviews)
leading to the development of hypothesised research model and a survey, ii)
developing an appropriate survey to test and validate the research model. A
subsequent confirmatory study to test the research model, resulting from the empirical
data, is conducted to discuss the validity and reliability of the research model.
3.2 Research Philosophy
The values, beliefs and experiences of a researcher are inseparable from his/her
research design and the particular way a research is conducted. Particularly, the way a
researcher views the world underlies the choice of research practices to be used
including research approaches and strategies. According to Hughes and Sharrock
(1997), the researchers beliefs about how to create knowledge constitute a research
philosophy, that is, concerning the nature and development of knowledge, and in
particular how that knowledge is created. Given that the philosophy incorporates
important assumptions about the researchers world view, it is essential to discuss the
research philosophy of the thesis before going into the detail of the chosen research
methodology, since this discussion in itself can help a researcher to clarify the
fundamental beliefs underpinning choice of research design and methodology
(Easterby-Smith et al., 2002). The several philosophical perspectives debated and
criticised among researchers help us at an early stage to appraise different
methodologies, clarify the research design, avoid incompatible applications and
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redundant work and recognise limitations of diverse research approaches at an early
stage.
In the marketing research community, a variety of epistemological and ontological
philosophies can be drawn upon, each containing important differences which may
influence the way a researcher thinks about the research process (Carson et al., 2001
as cited in Law, 2009). According to Kvale (1996), reviewing ontological and
epistemological issues is important to minimise methodological error, and to
maximise the success of the research investigation process. The selection of
methodology arises from researchers own ontological and epistemological position
and hence affects both the research process and the expected output format. Some
researchers work within frameworks known as research paradigms (Healey and Perry,
2000). According to Deshpande (1983:101), a paradigm is a world-view or set of
linked assumptions about the world which is shared by a community of scientists
investigating the world. Healy and Perry (2000) enumerate four dominant research
paradigms: a) positivism, b) critical theory, c) constructivism, and d) realism. In
addition, they offer three elements of paradigm: a) ontology, b) epistemology, and c)
methodology.
Ontological and epistemological approaches are briefly discussed here. Eaterby-Smith
et al. (2003:31) define ontology as the assumptions that we make about the nature of
reality. This raises questions as to the assumptions held by the researcher in relating
to the world, and how it is seen to operate. Ontology involves the portrayal of the
basic categories and relationships of being, and deals with the structure and properties
of reality in which social phenomena are described, either objectively, understood as
independent of humans, or subjectively understood as having existence only through
humans (Saunders et al., 2007). On the other hand, epistemology is defined as a
general set of assumptions about the best ways of inquiring into the nature of the
world (Easterby-smith et al., 2002: 31). Epistemology is the branch of philosophy
that studies what constitutes acceptable knowledge with respect to possible methods
of gaining knowledge and validating it. As shown in Figure 3.1, the ontology of a
research design precedes its epistemology, which is then followed by a chosen
methodology that elucidates the techniques used by the researcher to investigate the
reality of world.
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Figure 3.1: The Interrelationships between the Building Blocks of Research

Adapted from Hay (2002:64)
Understanding available philosophical alternatives is critical in helping the researcher
to make ontological and epistemological choices suitable for the research methods
undertaken. Each potential epistemological approach emphasises a particular
ontological position. At one extreme, the social constructionist ontology, which is
determined by a focus on the collective reality constructed by people, rather than by
objective and external factors, is associated with inductive approaches, where theory
follows data, generating conclusions from observations and lending itself to
qualitative methods (Easterby-Smith et al., 2002). Alternatively at the other extreme,
objective positive ontology is followed by deductive epistemology where hypotheses
are accepted/rejected objectively, and theory precedes data, lending itself to
quantitative research methods. Between these two extreme philosophical domains lie
a number of alternatives, all of which tolerate some affiliation to the dominant
philosophies. Although there is controversy about which and how many research
paradigms are firmly established, most scholars recognise several types, including the
post-positivist paradigm (Carson et al., 2001; Moisander and Valtonen, 2006). Denzin
and Lincoln (1994) argued that the positivist paradigm is bounded and challenged by
the post-positivist paradigm, which accepts that objectivity in research is desirable but
not perfect. Carson et al. (2001) defined post-positivist as combining both inductive
and deductive research approaches, with the view that true quantitative
understanding might emerge from rich qualitative understandings (Hughes and
Sharrock, 1997:18). Hence, this stance is considered suitable for both qualitative and
quantitative research.
An affiliation to any particular research philosophy results from a) philosophical
position of the researcher, and b) the requirements stemming from the research aim
and the objectives (Yin, 2009). In this research, the main factors which influence the
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adoption of CRM by organisations are explored This conceptual framework will help
to develop improved approaches to CRM demonstrating conceptual foundations for
the disciplinary integration of CRM within business settings. Previous studies in both
business and IT disciplines have utilised both qualitative research methods for
building a theoretical model (Goodhue et al., 2002; Kapoulas et al., 2004), and
quantitative methods for empirically testing the proposed model (Croteau and Li,
2003; Peters and Fletcher, 2004; Reinartz et al., 2004). Because the complex nature of
the CRM system includes subjective perception and objective measures of business
outcomes (John and Reve, 1982), this research is conducted within a broadly post-
positivist paradigm. Hence, it begins with an extensive literature review in order to
develop a conceptual framework of the relevant factors that affect organisations
adoption of CRM, and to inform the interview design. It follows with a qualitative
study of data derived from individual interviews. The interview design aims to
explore the subjective perceptions and experiences of a variety of marketing
managers, CIOs, and employees working with CRM. This qualitative part of the study
serves not only to explore issues that are important to the relationships in the proposed
conceptual framework, but also to ensure that the proposed framework is efficient in
tackling significant aspects of the study. The second stage of this research is to
empirically test the proposed conceptual framework across a wider sample of
population, and develop an appropriate survey, sample and measures. Hence, the
quantitative study is designed to offer additional breadth and generalisation to the
results. Results of this part of the study are found using statistical techniques. Finally,
the significant findings, implications and limitations for practitioners seeking to
extend their use of CRM are presented.
3.3 Research Approaches
There are two broad approaches to research: inductive and deductive. An inductive
approach, often called a bottom-up approach, is drawn from empirical observations
moving to broad generalisations and theories (Sekaran, 2003; Trochim, 2006). Using
this approach, the researcher observes certain phenomena, detects patterns and
regulations, and generates some general conclusions and theories based on his/her
observations. On the other hand, a deductive approach, often called a top-down
approach, works from general theory to specific (Sekaran, 2003; Trochim, 2006).
Using this approach, the researcher begins with a theory about the topic of his/her
interest, narrows the topic down into more specific hypotheses that can be tested,
collects observations to address the hypotheses, tests the hypotheses with specific
data, and draws conclusions from available facts.
Many researchers view qualitative enquiry as mainly an inductive process. Qualitative
enquiry starts with examining specified topics and themes, then assessing any
emergent patterns that suggest relationships between variables, and finally generating
and building theory. On the other hand, in research community, a quantitative method
is more often associated with deductive processes, and is used to test theory and prove
generalisations about the phenomenon (Easterby-Smith et al., 2002).
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3.4 Research Strategy
Within the field of social science there are many research strategies which a
researcher may adopt. Remenyi et al. (1998:44) describes research strategy as a way
of going about ones research, embodying a particular style and employing different
research methods. In other words, research strategy specifies how the researcher will
manage to answer research questions systematically rather than haphazardly.
Zikmund (2003:740) defines research strategy as a plan specifying the methods and
procedures for collecting and analysing the needed information. Several types of
prominent research strategy exist, including experiment, survey, analysis of archival
information, ethnography, and case study (Sekaran, 2003). According to Yin (2003)
the research strategy should be chosen as a function of the research situation. In
general, it refers to different ways of collecting and analysing empirical evidence of
the research interest. The choice of research strategy is guided by a) the nature of
research aim and objectives, b) the amount of time and financial budget required to
undertake the research, and c) and the researchers philosophical foundations
(Saunders et al., 2007).
Each of these potential strategies has its own specific approach to collecting and
analysing empirical data, and may offer different kinds of advantage and disadvantage
in accessing research data. Most of the strategies mentioned are seen as inappropriate
for the aim and objectives of this research. For instance experiments, which fall under
the positivist research approach, are normally used in natural science studies, and
typically involve two or more experimental groups and a control group. Two main
features of this method are manipulation and control. One drawback of this method is
that a laboratory setting is often different from the real world (Collis and Hussey,
2003). On the other hand, and because of the limitation of the researchers time, an
ethnographic approach seems to be an inappropriate strategy because it requires the
researcher to be a full-time member of a work group as well as doing the research, and
involves direct participation in the activities of that particular workplace (Collis and
Hussey, 2003).
Yin (2003) argues that the case study approach is preferable for questions relating to
why, what or how, firstly because the researcher has no control over events and
secondly because such questions deal with operational links needing to be traced over
time, rather than by frequency, and will focus on a contemporary phenomenon within
a real-life context. In business studies, a common case study focuses on a company or
parts of a company, but may also focus on other things, such as a group of people or
events. Some drawbacks of using a case study strategy include difficulties in finding
organisations that are willing to participate in a research study, and in contextualising
events within a particular period of time. Furthermore, case studies are described as
very time consuming and costly (Saunders et al., 2007). This strategy is additionally
not appropriate in developing a general conceptual framework, hence is not used in
this research.
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The use of survey is one of the most popular and prevalent strategy in business and
management research (Saunders et al., 2007). In addition, it is commonly favoured in
CRM studies (Karimi et al., 2001; Croteau and Li, 2003; Wu and Wu, 2005). The
rationale for using a survey method in this research is that this method will favour the
elicitation of responses from several organisations across different sectors. A survey
allows for the development of trends, such as determining whether there is a tendency
for particular types of organisation to display behaviours different from organisations
of another type. The survey method strategy is generally used in descriptive and
exploratory research, and is mainly associated with a deductive research approach. In
addition surveys are used successfully by researchers from diverse domains to help
test proposed hypotheses, develop measurement scales, and build theoretical models
(Chen et al., 2000).
To maintain continuity in CRM research, the survey design of this study reflects the
key themes and factors emerging from previous studies, as discussed in Chapter two.
The survey questions are informed by previous work in the CRM field. The data
collected by survey method can be used to test and validate which factors influence
different organisations adoption of CRM, and to produce a model of these factors.
Moreover, the survey strategy is popular because it allows the collection of a large
amount of data from a substantial population in a highly economical way (Remenyi,
1998). Because the aim of this research is to build a model of factors affecting the
adoption of CRM by different organisations, there is a need to test the model on a
large sample.
Of the two main methods utilised, qualitative and quantitative, the qualitative
approach tends to be associated with the phenomenologist paradigm, while
quantitative research tends to be linked with the positivist paradigm. A qualitative
research method is based on methods of data generation, which are flexible and
sensitive to the social context in which data are produced (Collis and Hussey, 2003).
The nature of reality is defined by the interaction of the researcher with the
phenomenon under study. Qualitative research usually emphasises words rather than
quantification in the collection and analysis data. A quantitative research method
generally involves numerical data, which can be quantified to help answer research
questions, and normally takes the form of a questionnaire (Saunders et al., 2007).
Quantitative research is commonly large-scale research based on substantial samples.
The data obtained from a quantitative method is usually descriptive, providing data
which illustrates frequencies (Collis and Hussey, 2003). Collis and Hussey (2003)
summarise the main features of the two approaches in Table 3.1.





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Table 3.1: The Main Features of the Quantitative and Qualitative approaches
Qualitative Quantitative
Is concerned with generating theories
Uses small sample
Data is rich and subjective
Reliability is low
Validity is high
Generalises from one setting to another
IS concerned with hypothesis testing
Uses large sample
Data is highly specific
Reliability is high
Validity is low
Generalises from sample to population
Source: Collis and Hussey (2003:55)
As mentioned, there are two phases of data collection for this research. The first phase
aims to develop a theoretical conceptual model using the extant literature and the
results of in-depth interviews (qualitative methods) with varied stakeholders involved
with the CRM system. In the first phase, the in-depth interviews are intended to
ensure that the researcher takes into consideration the main factors that may affect
different organisations adoption of CRM in the research context. The results from
phase one are used to construct the proposed conceptual framework of factors that
may affect organisations adoption of CRM. The second phase of the research aims to
develop an appropriate survey (quantitative methods) to test and validate this model
empirically. After completion of the required data collection in this second phase, the
data is analysed using various statistical techniques, as will be discussed in the
analysis chapter. The analysis starts with an Exploratory Factor Analysis (EFA),
which is used to explore, identify and report the factors identified in the
questionnaires. Subsequently, Confirmatory Factor Analysis (CFA) is applied on the
hypothesised measurement model. Finally, a Structural Equation Modelling is applied
to the structural model, to investigate any relationships that could lead to better
understanding of organisations adoption of CRM.
The research philosophy reflects the researchers view of reality and the requirements
stemming from the research aim and objectives (Yin, 2009). Because of the
quantitative and qualitative nature of the research objectives, mixed approaches will
be adopted in this study for the purpose of achieving the research objectives. In
business and management research, using a combination of qualitative and
quantitative approaches is increasingly advocated. Using multiple research approaches
has its advantages, which include serving different purposes in a research. In this
research, the researcher employs interviews at an exploratory stage, seeking insight
into the general nature of the problem, before building a questionnaire to collect
explanatory or descriptive data to gain confidence he/she is addressing the key issues.
These different ways of approaching the same complex phenomena, such as CRM
adoption, will result in better understanding of the key issues, and an increased
reliability of the research (Kvale, 1996). The combination methods will also support
credibility in findings through triangulation of the data, which suggests that the more
correlation on a particular issue is found between different data sources, the more
reliable the interpretation of the data. The basic assumption of triangulation is the
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potential gaps or weaknesses in each single data collection method are compensated
by the counterbalancing strengths of another method (Piekkari and Welch, 2004).
In this research, there are two main phases to data collection. The initial phase
employs qualitative approach and is concerned with identifying the main practical
issues (categories or factors) which influence organisations adoption of CRM system.
The second phase is proposing a conceptual framework or model, and establishing a
pool of key items (subcategories or themes) that will be used for the questionnaire
development. Categories are identified to classify factors collected; theses categories
are modelled on those found in the relevant literature discussing CRM adoption
within different categories. Based on the literature, the main categories are classified
into more detailed subcategories.
3.5 Research Methods
As mentioned earlier, the survey strategy is one commonly found in CRM studies
(Becker et al., 2009), with the advantage of allowing researchers to collect a
substantial population of data at a relatively low cost (Saunders et al., 2007).
Consequently, this research employs a survey strategy, since the strengths of this
method promise solid research results. In particular, the data collected by using a
survey strategy can be used to examine associations between the dependant variables
and the independent variables in the proposed conceptual model, and to produce a
model of theses associations.
A survey strategy is often based around a questionnaire method. Nevertheless, the
questionnaire is not the only data collection method that can be used within this
strategy. Structured observation and interviews with standardised questions often fall
into survey strategy. Individual interviews and questionnaires are the two data
collecting methods applied in this research.
3.5.1 Interviews
In order to narrow and crystallise the research problem, this study begins with an
extensive review of a literature about relationship marketing, CRM, and CRM
adoption. Reviewing the literature has helped the researcher refine the scope of the
research, leading to a specific research question and a list of theorised factors
affecting CRM adoption. The first phase of this research is an exploratory study
aiming to identify the main factors that may explain the organisational adoption of
CRM systems. In addition, this exploratory study is designed to contextualise the
research framework within Jordan, and to refine research understanding of key issues
before using a questionnaire to collect descriptive or explanatory data. Robson (1993)
suggests that in an exploratory study, individual or in-depth interviews can be very
useful for finding out what is happening or for seeking a new insight. Accordingly, in-
depth interviews with various stakeholders, including a variety of marketing
managers, chief information officers (CIOs), and employees working with CRM, are
employed to achieve the required objectives of this study.
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An interview is a purposeful discussion between two or more people (Kahn and
Cannell, 1957:149 as cited in Saunders et al., 2007:318). In other words, research
interviews are an interpersonal situation, a conversation between two persons
regarding a theme of mutual interest (Kvale, 1996:14). Kvale (1996) explains that
research interviews are a form of human interaction, in which knowledge and
understanding evolve through a dialogue. Interviews involve the researcher speaking
to the respondent directly, listening to the replies, ensuring that respondent replies are
clear and accurate, and recording answers (Hair et al., 2006). The interaction between
the participants and the interviewer may lead to greater awareness of their
organisations point of view on CRM, and their interactions as to the main factors that
may affect their adoption of CRM systems.
There are many different classifications and types of interviews. The two best-known
types of interviews are: in-depth (individual) interviews and focus group interviews.
The in-depth interview is used to gather a rich insight from respondents as to what is
happening in their context (Robson, 2002). According to De Vos (2002: 298), the in-
depth interview is used throughout research in academia to determine peoples
perceptions, opinions, facts, and to forecast their reactions to initial findings and
potential solutions. Additionally, Kumar et al. (1999) suggests that researchers should
employ the in-depth interview method when it is important to explore a subject in
detail, or to probe for latent attitudes and feelings. On the other hand, the focus group
interview is a valuable method for assessing how several people can work out a
common view, or for eliciting a range of views. It is a way of listening to people and
to create lines of communication (Saunders et al., 2007). In this study, in-depth
interview method is chosen over focus group interview for three reasons: firstly the
ability to conduct focus group interviews with employees and managers has proven
almost impossible, due to the difficulties of grouping various staff from different
organisational levels or functions into one place at one time. Secondly, since the aim
of data collection is to elicit different stakeholder views, this could be more difficult
to obtain in a group situation, because of time limitations and group normalising.
Thirdly, views related to some elements of CRM might be considered sensitive by
some participants; electing sensitive areas/topics might be inhibited in a focus group
context (Fontana and Frey, 1994 as cited in Ryals and Payne, 2001). Moreover, at the
initial phase of this study, it seemed more likely that in-depth interviews would help
to determine the desired spectrum of insights and views in regard to the CRM system,
and the factors that maight affect its adoption. This initial exploration can also assist
in formulating and designing the survey to collect descriptive data, and test the
validity of the research hypotheses.
Lee (1999) classifies the in-depth interviewing process into three types, characterised
by the extent to which the interview questions are determined and standardised
beforehand: structured, unstructured, and semi-structured. Briefly, the structured
interview follows a sequence of standard questions providing systemic data which
might provide insight into procedural knowledge. The unstructured interview, on the
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other hand, relies mainly on the spontaneous generation of questions, and allows
questions based on the interviewees response (Sekaran, 2003). Although unstructured
interviews offer a high level of flexibility that may help the researcher determine what
aspects need further explanation, this interview type has some disadvantages as it
generally generates less systematic data, requires a greater amount of interaction time,
and provides respondents with too much control (Saunders et al., 2007). Between
these two spectra falls the semi-structured interview type, which involves the
interviewer entering into the interview setting with a list of key themes and questions
to be explored during the interview. However, at the same time, there is an openness
to changes of sequence and forms of questions in order to follow up the answers given
and the stories told by the subjects (Kvale, 1996:124). It is even possible to deviate
from the interviews pre-determined themes or questions, if the interviewer thinks that
this could provide more fruitful answers, enabling the participants to take any
direction he/she wants without presuming answers (Seidman, 1998:69). According to
Gillham (2005), the semi-structured interview is especially useful for gathering data
when the concepts are not well understood and participants views are subject to
considerable investigation and debate. Since these characteristics are compatible with
this research purpose, (concerning factors that may affect organisations adoption of
CRM), this study has followed a semi-structured in-depth interview approach
allowing participants to describe their opinions and perceptions of the factors
affecting CRM adoption.
The interviews conducted for this study help the researcher to set up the research
hypotheses for empirical testing. The conceptual framework design of this research is
based on the results of the literature review and the interview results. The interviews
are converted into text by fully transcribing their recordings, then transcribed
interviews are analysed by processing their words and phrases. All the interviews
sessions are conducted in Arabic. In accordance with previous CRM studies (Dous et
al., 2005; Law, 2009), qualitative interviews are analysed using two specific
techniques: one is called within-case analysis (comparing data against theory), and the
other one is called cross-case analysis (data in one case compared to data in other
cases). The objective of the within-case analysis is to check how the interviews
findings fit with previous findings in the literature. On the other hand, the cross-case
analysis is to locate and examine the similarities and differences across various data
sets (interviews).
3.5.2 Questionnaire
In adopting the strategy of employing survey as a purposeful quantitative method in
addition to the qualitative method of in-depth interviews, the study aims to maximise
the opportunities for gathering data which will offer a broad spectrum of the results.
The questionnaire is a convenient data collection mechanism and is most commonly
used within a survey strategy (Saunders et al., 2007). A questionnaire is defined as a
research instrument consisting of a set of questions that is designed to collect
information from respondents (Sekaran, 2003). A questionnaire collects information
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by asking a set of pre-formulated questions in a predetermined sequence in a
structured questionnaire to a sample of individuals drawn so as to be representative of
a defined population (Yin, 2009).
A questionnaire survey is generally broad in nature, focusing on scope rather than
depth of data collection. A questionnaire is an effective way to find out what
organisation members are thinking and how they feel (Blaxter et al., 2001). This
explains why questionnaires have been used extensively in quantitative studies aiming
to measure service quality, customer satisfaction and customer loyalty. In other
words, survey questionnaires have a history of use in this specific area of marketing
and management studies. Given that the majority of previous studies investigating
CRM adoption have relied on the survey strategy (Wu and Wu, 2005; Meadows and
Dibb, 2008), this study has employed the survey method in order to investigate the
factors that may affect organisations adoption of CRM. This survey is conducted
with managers and employees believed to have relevant experience with, and insights
into the factors affecting their organisations adoption of CRM system.
Once a survey questionnaire has been chosen as the appropriate research
methodology, the next task is to determine the method of communication with the
respondents. The type of questionnaire differs according to how it is administered and
in particular, the amount of contact that the researcher has with the respondents.
According to Saunders et al. (2007), questionnaires are of two types: the first type is a
self-administered questionnaire which is usually filled in by the respondents; this type
includes on-line questionnaires, postal questionnaires, and collection questionnaires.
The second type is an interviewer- administered questionnaire which usually involves
the interviewer recording each respondents answers; this type includes telephone
questionnaires and structured interviews (face-to-face). Sekaran (2003) points out that
the self-administered technique has many advantages over the other techniques of data
collection in a survey study, mainly because it is less expensive when administered to
groups of respondents. Furthermore, this technique has the potential to establish
rapport and motivate respondents and gives the researcher/administrator a chance to
clarify respondents doubts. Such methods may increase the questionnaire response
rate to almost 100%.
A survey is a strategy associated with the deductive approach and positivist
philosophy (Collis and Hussey, 2009). It is one of the most common research strategy
in business and management studies as it enables the collection of a large amount of
data from a large population relatively economically (Sim and Wright, 2000).
Questionnaires and structured interviews often fall into the survey strategy. However,
the questionnaire is the most common data collection method within this strategy.
However, using a questionnaire in the survey has certain limitations that the
researcher should consider before deploying this method. Firstly, the creation of an
appropriate questionnaire is a complex process, which needs to ensure that the
collected data are going to answer the research questions (Saunders et al., 2007).
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Secondly, a questionnaire is time-limited, often offering only one chance to collect
data; as such, it needs to be piloted to verify the accuracy and consistency of
responses (Oppenheim, 1992). Thirdly, the importance of item wording and ordering
of questions must be monitored carefully in order to avoid the risk of respondents
misinterpretation of questions (Burns, 2000).This study is one of few investigations to
explore the concept of CRM as a joint development between marketing, management
and IT disciplines, seeking to develop a conceptual framework to unravel the complex
nature of CRM. Hence, the previous literature was first reviewed to develop the set of
indicators (observed variables) for each latent variable in this study. In addition, the
conducted in-depth interviews were used to elicit items that could measure the latent
variables in the research context. Furthermore, ahead of conducting research, the
questionnaire was evaluated by experts (Prof. Lyndon Simkin: Professor of Strategic
Marketing at Oxford Brookes University; Dr Ana Domingos Canhoto: Senior
Lecturer at Oxford Brookes University; Prof. Yuksel Ekinci: Professor of Marketing
at Oxford Brookes University). Since the data collection was conducted in Jordan
where most participants would have better understanding of Arabic than English, the
questionnaire was translated into the local language. This was far harder than
expected as all items and questions found from previous studies were in English.
According to Mller (2007:210), translation is not merely representation or
reproduction it creates something new and unique. Moreover, Temple and Young
(2004) state that transferring cultural meanings between languages is a challenging
task mainly because researchers can represent meanings in different ways.
Consequently, an external professional fluent in both English and Arabic was
consulted, in order to ensure that the participants understanding of the Arabic version
would be close to the original English version. The Arabic questionnaire was also pre-
tested with three employees from the participating organisations.
3.6 Sampling Design and Procedures
For some research, it can be possible to survey the whole population and undertake
census if such research focuses on small potential population. However, even if most
research involves a large potential population, it would be impossible, impractical,
and too expensive to collect data from all of it. Consequently, it is common for a
researcher to take a small portion of the population, which is referred to as a sample
which may be defined a subset of the population embracing different members
selected from the whole group of interest (Bajpai, 2010). On the other hand, sampling
is the process of selecting a portion of the population so that it represents the whole
population. Most researchers need to utilise sampling procedures because often, in
research, the group of interest is large, including various parts or members, which
make it unfeasible to collect data from all of them. Sampling procedures offer a
variety of methods to help researchers generalise their study by establishing the
representativeness of the whole population and considering only a small potential sub-
group (Sekaran, 2003).
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This study employs a survey research strategy to answer the research question and
achieve the research purposes. Particularly, it seeks to develop a conceptual model of
the major factors affecting organisations adoption of CRM system by using primary
data collected from varied stakeholders including a variety of marketing managers,
chief information officers (CIOs), and employees working with CRM. In this research
context the sampling consideration is needed as the group of interest is large. The
following section discusses sampling procedures and gives details as to where to
collect data. The major steps in the sampling process include sampling population,
sampling frame, sampling design, sample size determination, and execution of
sampling process (Sekaran and Bougie, 2009).
3.6.1 Sampling
The sampling process starts with deciding who is to be surveyed (target population).
Furthermore, the target population must be defined early in the sampling process. The
target population is defined in terms of shared characteristics assessed and measured
accurately by the researcher (Sekaran and Bougie, 2009). Improper definition of the
target population leads to misleading results which might pose real risks for a research
success. According to Churchill and Iacobucci (2005), the research questions and the
scope of the study play a crucial role in defining the target population and its
specifications. Due to the complexity of diverse business functions involved in
handling CRM, this study entailed conducting empirical investigation with varied
stakeholders including marketing managers, chief information officers (CIOs), and
employees working with CRM. This study was conducted with organisations that had
implemented CRM technology. The researcher has not differentiated between mature
and less mature adopters. This tactic was necessitated partly to improve the response
rate, but at the time it provided opportunities to widen the range and diversity of
approaches to CRM adoption. The presence of such a wide range of organisational
approaches to CRM reflects needs for developing a comprehensive and holistic view
of CRM and its adoption. Once the target population is defined, the next step is to
develop a sampling frame to give everyone in the target population a known chance of
inclusion in the sample.
3.6.2 Sampling Frame
The sampling frame is a list of all the elements composing a target population from
which the sample is drawn (Babbie, 2007). It is a convenient list that a researcher can
gain access to and use to obtain a sample for inclusion in research. Sampling frame
completeness is very important, due to its implications regarding the extent to which a
researcher can generalise from research findings to the whole population. Hence, care
should be taken to select an appropriate list. Excluding some elements from the
sampling frame may result in a number of biases and consequently the selected
sample may not be representative of the whole population (Saunders et al., 2007).
Nonetheless, although researchers may attempt to find a complete list of the sampling
frame, it is rarely feasible to select a sampling frame that offers details of the entire
population (Sekaran and Bougie, 2009). According to Churchill and Iacobucci
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(2005:284) there is rarely a perfect correspondence between the sampling frame and
the target population of interest. Since it is unlikely that any sampling frame will be
ideal, researchers ought to acknowledge deficiencies and issues in the sampling frame
mainly when generalising the research findings to the entire population. However,
there is always some degree of sampling frame error, which may occur especially
when inclusive segments of the defined target population are not accurately
represented in the sampling frame.
In this study, there is no existing sampling frame in Jordan, the country under study in
the sample, which highly represents the general population of various organisations
adopting CRM across the four different sectors (banking and finance,
telecommunication, hospitality and automotive). Hence the researcher contacted a
number of local CRM experts aiming to build a list of organisations working with
CRM in Jordan across the four sectors. These experts were chosen for their
knowledge of practices that were widespread among the IT, Hotels,
Telecommunications, and Banking industries, as well as their professional ability to
provide references to organisations that use CRM in Jordan. A brief profile of the
experts is represented in Table 3.2. The selection of CRM experts was done to ensure
that they represented a variety of backgrounds and industries. By doing so,
a triangulated view of the research sample was established.
Table 3.2: A Brief Profile of the CRM Experts
Expert
No
Sector Job
Description
Education Relevant Responsibilities Experience
with CRM
1 IT CRM Technical
Specialist

BSc Computer
Science
-Demonstrating CRM solutions to
companies
-Managing CRM products
More than 6
years
2 Hotels Business
Development
Consultant
MSc Hotel
Management
-Driving Marketing and CRM for a Hotels
Chain
-Supporting departments in developing
functional excellence
-Acting as a change catalyst in the cultural
and organizational transformation
More than
10 years
3 Telecomm Marketing and
CRM officer
BA Marketing -Assisting with day to day tasks with PR
activities
-Assisting with branding related activities
-Planning and identifying the CRM annual
action plan
More than 6
years
4 Banking Customer
Service
Executives
MBA Finance -Achieving defined sales target
- Building relationships with profitable
customers
- Increasing customer satisfaction and
retention
More than 8
years
5 IT Senior Business
Analyst
BSc
Management
Information
System
-Ensuring that agreed Business
requirements are in compliant with the
overall Technology and Business Strategy.
-Managing the process of establishing
business requirements for new systems or
enhancing existing systems and proposing
efficient solutions to satisfy these
requirements.
More than
10 years
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The collective experience of these experts helped the researcher to understand the
latest development of CRM, in the region. The experts represented a variety of
backgrounds and different types of organisations to offer timely insights, case studies
of leading edge firms, and essential guidance to select organisations that possessed
sufficient technology resources and capabilities relevant to customer service.
It should be noted that there is no existing evidence to validate the completeness of
this list. Nevertheless, contextual information of the respective industries under
investigation in this study can provide a valuable reassurance of the quality of the
sample. As mentioned in Chapter one, there are 25 private banks, 4
telecommunication firms, and over than 470 hotels in Jordan, of which 21 are five-star
hotels. It should be noted that there is no existing information which indicate the
number of automotive traders in Jordan. In this study, the researcher randomly invited
10 banks and hotels, 3 automotive firms, and the four telecommunication firms in
Jordan to participate in the study. As a result, 3 banks, hotels and telecommunication
banks, and 1 automotive trader agreed to participate in this research. In regard to the
sample size, it was not possible to determine in advance the number of participants, as
participation was optional by responses.
3.6.3 Sample Size
After selecting a sampling frame, the next step involves determining the sample size.
Essentially, choosing the sample size reflects how confident a researcher need to be
that the sample reflects the entire population and will permit a valid generalisation of
research findings. Generally the smaller the population, the better researchers can
generalise to the population. Furthermore, in theory the appropriate sample size can
be determined in two ways. The first is to use a statistical formula, and the second is
to use some ad hoc methods. Ad hoc methods are based on rules of thumb, previous
similar studies, the researchers own experience, or simply what is affordable. On the
other hand, a statistical formula is used to determine a minimum sample size which
offers a researcher confidence when generalising the findings. Taking into account
these two opposite influences, it is almost common to find the final sample size is a
matter of judgement and statistical calculations.
Malhotra (2007) suggested that required sample size depends on elements including
the proposed data analysis techniques, and access to sampling frame. This study
employs Structural Equation Modelling (SEM), which is sensitive to sample size, and
is affected negatively when applied to small samples. Although Bollen (1998)
suggests using a minimum sample size of 100, others state that a sample size of 200 is
sufficient, 100 as poor, and 1000 as excellent (Spector 1992; Hair et al., 2010). As a
general rule of thumb, a study should have at least between 10-15 participants per
variable for generalisability purposes (Hair et al., 2006), and a sample size of 300
participants is deemed comfortable (Tabachnick and Fidell, 2001).
On the other hand, statistical calculations are considered when deciding the
appropriate sample size. Saunders et al. (2007) highlight that the choice of sample
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size is usually governed by the margin of error that a researcher can tolerate. The
margin of error is defined as the degree of accuracy a researcher needs for any
estimate made from a sample. Researchers normally work with a confidence level of
95 percent, which means that they use a 5 percent level of margin error. Table 6.1
represents the different sample sizes at a confidence level of 95 percent. Based on
Table 6.1, the sample size of 384 is very good for any population size. In this study,
the sample used for factor analysis is 301 participants (cases), the analysis is
conducted on 21 variables (items), and the ratio of items to cases is 14. Hence, the
sample size of this study seems to be sufficient.
Table 3.3: Different in Sample Sizes at a Confidence Level of 95%

Source: Saunders et al. (2007:212)
Population Size

Degree of Accuracy/Margin of Error
0.05 0.035 0.025 0.01
10 10 10 10 10
20 19 20 20 20
30 28 29 29 30
50 44 47 48 50
75 63 69 72 74
100 80 89 94 99
150 108 126 137 148
200 132 160 177 196
250 152 190 215 244
300 169 217 251 291
400 196 265 318 384
500 217 306 377 475
600 234 340 432 565
700 248 370 481 653
800 260 396 526 739
900 269 419 568 823
1,000 278 440 606 906
1,200 291 474 674 1067
1,500 306 515 759 1297
2,000 322 563 869 1655
2,500 333 597 952 1984
3,500 346 641 1068 2565
5,000 357 678 1176 3288
7,500 365 710 1275 4211
10,000 370 727 1332 4899
25,000 378 760 1448 6939
50,000 381 772 1491 8056
75,000 382 776 1506 8514
100,000 383 778 1513 8762
250,000 384 782 1527 9248
500,000 384 783 1532 9423
1,000,000 384 783 1534 9512
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3.6.4 Sampling Techniques
Sampling techniques are divided into two types: probability sampling and non-
probability sampling technique (Saunders et al., 2007). In the probability sampling,
the probability of selection of each respondent is known, and all respondents in the
sampling frame have an equally known chance of being included in the sample
(Robson, 2002). Probability sampling is often associated with survey research strategy
(Churchill and Iacobucci, 2005). There are four major types of probability sampling
techniques/approaches: simple random sampling, systematic sampling, stratified
sampling, and cluster sampling. The key features of each technique are described as
following:

Simple Random Sampling
This technique is the most basic form of probability sampling, where all
elements of the population have similar characteristics. This technique is
completely random, which allows each element of the population to have an
equal chance for being selected in the sample (Robson, 2002). Hence simple
random sampling requires a full list of the population (Gray, 2009).
Systematic Sampling
This sampling technique involves systematically spreading the sample through
the list of the population, where every xth case of the population is sampled
from the sampling frame. It is believed that this technique has an element of
randomness (Fellows and Liu, 2008). Both simple random sampling and
systematic sampling are suitable for studies that cover a wide geographical
area, where fact-to-face interaction is not essential for collecting data. The
selected samples are more likely to be disseminated throughout the area.
Saunders et al. (2007) suggests that systematic sampling can be employed for
all sample sizes in contrast to simple random sampling, which is only
appropriate for small sample sizes.
Stratified Sampling
This is a modification of random sampling in which stratification (i.e dividing
the population into a number of homogeneous groups where members of the
group have common characteristics) is necessary in advance. A random
sampling or systematic sampling technique is then applied to take a sample
from various strata (groups) (Gray, 2009). This technique improves the
representativeness of a sample, in terms of stratification variables (Babbie,
2007). It also needs accurate information on population and a list which
includes groups sharing specified characteristics.
Cluster Sampling
This sampling technique requires dividing the population into a number of
groups called clusters, each of them containing a range of characteristics.
These groups are called clusters because all members of selected clusters
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would be included in the sample. The process of selecting clusters often
employs a simple random technique (Walliman, 2005). Cluster sampling is
normally used for a widely dispersed and large population. Nevertheless, it has
some limitations with respect to representing the total population, since it
represents the populations less accurately than stratified sampling approach.
For the non-probability sampling, no statistical inferences about the characteristics of
the population are made, and the probability of each case being selected from the
population is unknown. Hence it enables a researcher to rely on personal judgment to
answer research questions without the intention of creating statistical generalisation
(Robson, 2002). Non-probability sampling is often associated with case study
research (Churchill and Iacobucci, 2005). Its techniques include four major types:
convenience sampling, quota sampling, purposive sampling and snowball sampling.
The key features of these four types are described in the following.
Convenience Sampling
This technique involves the selection of convenient respondents whom are
easily or simply accessible to the researcher (Fellows and Liu, 2008). The
assumption underlying this method is that the target population is
homogenous, hence the individuals selected to act as participants have a better
chance to represent the overall target population. Although this technique is
used broadly, it is prone to bias as the sample may not be representative to the
target population (Saunders et al., 2007). Consequently, Gray (2009) suggests
using this technique with extreme caution as a result of the problem of
generalisation.
Quota Sampling
This technique is an extension to the convenience sampling. However, it
involves the selection of prospective respondents or participants according to
pre-specified strata or dimensions defined based on demographic
characteristics, specific attitudes, or specific behaviours (Robson, 2002). A
quota is then decided for each dimension which forms part of the sample.
Convenience sampling is usually used within the strata. The underlying
purpose of this technique is to provide assurance that the variability in target
population as a whole is represented (Gray, 2009). Saunders et al. (2007)
suggests considering quota sampling as a type of stratified sampling method in
which the selection of respondents within strata is entirely non-random. This
might explain the traditional application of quota sampling for survey
sampling and large populations (Blaikie, 2000; Neuman, 2003). Quota
sampling has a number of advantages including its cost effectiveness. In
addition, quota sampling does not require a sampling frame and may therefore
be the only technique the researcher can use if a pertinent sampling frame for
the target population determined by the researcher is not available. On the
other hand, it should be used with sensible and relevant quotas to avoid data
88

bias. This necessitates having sufficient respondents in each quota to enable
the undertaking of subsequent statistical analysis (Neuman, 2003).
Purposive Sampling
Purposive or judgmental sampling depends entirely upon the researcher or
some other judgement or experience where a deliberate selection of the
participants is made into a representative sample that meets research
objectives. It is commonly used with very small samples such as case study
research and when the researcher wishes to select participants that are
particularly informative (Robson, 2002). This technique has its disadvantages,
in particular the unintentional exclusion of essential characteristics from the
population by the researcher, which may result in subconscious bias in picking
the sample (Gray, 2009). Consequently, such a sample cannot statically
represent the whole population.
Snowball Sampling
In this sampling approach the research subjectively identifies and qualifies a
small number of initial prospective participants and collects data from them
(Robson, 2002). Subsequently, they help the researcher identify other potential
participants with similar characteristics to be included in the study. Those
identified will then be approached to become part of the sample, and in turn
will be asked to identify other potential participants and so on until the
required sample size is gained. This technique is commonly used in case
studies and when participants of the desired population cannot be easily
identified (Fellows and Liu, 2008). The main disadvantage of this approach is
the unintentional exclusion of essential characteristics from the population by
the researcher, which will result on subconscious bias in picking the sample
(Gray, 2009). Consequently, such a sample cannot statically represent the
whole population.
According to Aaker et al. (2004), probability sampling has a number of advantages
over non-probability sampling; firstly, it allows the researcher more control over the
research process and secondly it can provide a group of participants whose
characteristics may be taken to demonstrate those of the larger population. Babbi
(2004:182) observes that today, probability sampling remains the primary method of
selecting large representative samples for social research. For the above reasons,
probability sampling is favoured in this study.
The choice of sampling techniques mainly depends on the research objectives.
Subsequently, the sampling frame of the research influences the researchers choice of
sampling techniques. In this study, a stratified random sampling technique is used to
ensure the representation of different sectors implementing CRM (banking and
finance, telecommunication, hospitality sector, and automotive) in Jordan, the country
under study in the sample. Also represented are varied stakeholders working with
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CRM within each sector (managers, CIO, and employees). Stratified sampling divides
the population into groups and locates samples randomly within each group. Stratified
sampling has several advantages; it is the most statistically efficient technique
resulting in lower standard deviations and higher confidence in research results, and it
allows the investigation of the characteristics of interest for particular strata/group
within the population (Churchill and Iacobucci, 2005). Contacts with CRM experts in
Jordan helped to determine how the sampling should be stratified, where it should be
focused, and how much new information would be required to meet the objectives of
the study. See section 3.6.1 for more details about those experts.
3.7 Summary
This chapter outlined the methodologies to be used in this study. The research was
divided into two phases. The initial phase used in-depth interviews seeking insight
into the general nature of the problem, and to reinforce researcher hypotheses
regarding the main factors that might affect different organisations adoption of CRM
within their practical context. Details about this phase and its results will be discussed
in the next chapter. The second phase was built upon the outcome of the initial phase.
It employed a questionnaire method to test and validate the constructed model which
included factors developed from the initial phase. Questionnaire development utilised
existing scales and measures from a large number of studies. After completing the
required data collection stage, the data was analysed using various statistical
techniques, as will be discussed in the analysis chapter. Finally, a confirmatory study
adopting qualitative methods was employed to meet the research aim of building a
rich conceptual model, increasing the flexibility of model representation, and
providing a tighter linkage between the adopted research methods at different research
stages.


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Chapter 4: Conceptualisation and Formulating Research
Hypotheses

4.1 Introduction
Building on the literature review of CRMs meaning and CRM adoption, this chapter
aims to present the conceptual framework of this study by combining the results of the
exploratory stage of the study with insights from the present literature. This chapter
will start by outlining the purpose of conducting exploratory research as a first stage
of the study. This exploratory research aims to provide insights from practice which
will contribute to identifying the main factors affecting CRM adoption for subsequent
testing. The overarching purpose of the exploratory study is to uncover the dynamics
of the CRM phenomenon within the context under study, and to understand what
CRM initiatives mean to those participating in this study, where the adoption is
actually occurring. Hence, employing a qualitative study in this research is helpful to
contextualise the embedded conceptual framework from the literature within the
views of practitioners in Jordan. This study employs in-depth interviews for which the
sample selection process and respondent characteristics will be described. In the data
analysis phase, two steps for data analysis were followed: analysis within case data,
and search for cross-case patterns. The combination of interview results and reviewed
literature presented in Chapter two will be used to develop research hypotheses. Based
on the results of this stage, the proposed conceptual framework of this study will be
presented.
4.2 Purpose of Exploratory Interviews
The mixed research approach of qualitative and quantitative methods is used as the
overarching methodology for this thesis. The exploratory qualitative study enables the
development of a conceptual framework while the subsequent quantitative study
allows the framework to be validated and tested via a sample survey. This
methodology is detailed in Chapter three. The rationale of this chapter is to sketch out
some of the details linked with the exploratory qualitative phase of the research.
Although the literature review generated a number of factors considered to be
significant in affecting CRM adoption, not all of them are necessarily applicable to
the population of the current study, which suggests that the factors generated from the
literature may not be significant or complete. According to Miles and Huberman
(1994:1), qualitative data are a source of well grounded, rich descriptions and
explanations of processes in identifiable local contexts. With qualitative data one sees
precisely which events led to which consequences and derived fruitful explanations.
Hence, qualitative data elucidates constructs within the context under study
(Churchill, 1999). For that reason, a qualitative study has been conducted to
contextualise the embedded conceptual framework as informed by the literature
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pertinent to CRM conditions in Jordan. The qualitative study is necessary to refine
and seek factors relative to the research context, in order to aid the development of the
conceptual framework and its validation through a questionnaire (Saunders et al.,
2007). Additionally, such a qualitative study supports the researcher in going beyond
preliminary conceptions in order to develop and refine the conceptual framework.
Qualitative data are rich and holistic with a valuable potential for revealing the
complexity of issues embedded in the study. Such data also add depth and nuance to
quantitative findings by rendering accessible any potential insights for exploring new
areas in depth and for developing hypotheses (Greene et al., 2005).
As suggested by Steckler et al. (1992), in the current research climate the issue is not
whether to use qualitative or quantitative methods but rather how to combine a broad
spectrum of qualitative and quantitative methods effectively. This study benefits from
such a combination, as explained in the beginning of this chapter. Qualitative research
methods are increasingly employed for inquiry within social science studies (Marshall
and Rossman, 1995). These methods have a number of merits which allow for rich
and holistic data, with significant potential to reveal complexities which might
otherwise be misplaced when employing only quantitative methods. In addition,
qualitative studies facilitate a breakdown of large and amorphous problem statements
into smaller, more manageable sub problems and subsequently into propositions
(Churchill, 1999). Qualitative research also lays emphasis on individual experiences
and how such individuals locate meanings related to events, processes and structures
in their lives (Kvale, 1996). It is popular to use qualitative studies in the marketing
discipline for generating and refining items for a questionnaire, especially when the
research aims to evaluate subjective experience of practitioners. As a result,
conducting a preliminary qualitative study is considered essential to obtain an insight
into practitioners experience with CRM, to discover issues, to develop a research
framework, and to generate items for the research questionnaire.
There are five major traditions in qualitative research: biography, phenomenology,
grounded theory, ethnography, and case study. In this particular case, the case study is
the preferred strategy when questions such as "how" and "why" are being posed, when
the researcher has little control over events, and when the focus is on a contemporary
phenomenon within its real-life setting (Yin, 2009). Case studies are especially
appropriate when the boundaries between the phenomenon of the study and the social
context are not clearly evident (Yin, 2009:18). In fact, most qualitative CRM research
has employed single or multiple case studies to understand the issues of CRM
adoption (eg: Wilson et al., 2002; Alshawi et al., 2011). In addition, case studies are
seen to provide a means to review theory and practice iteratively, which is very
relevant to the aim of this research. Hence, after evaluating a variety of research
strategies as proposed by Yin (2009), this study has opted for multi-case study
interviews supported by secondary data collection. The adoption of multiple cases
assures that common areas of interest are identified rather than being chance
occurrences (Eisenhardt, 1989 as cited in Barrat et al., 2011).
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Exploratory interviews are considered to be a key tool of successful cases in
qualitative research for data collection (Janesick, 2000). In this study, the interview
tool is considered to be suitable for evaluating the relevance of factors identified from
the literature as well as the relevance of such factors for organisations across different
sectors in Jordan. Before developing the research hypotheses, it is necessary to gain
an insight into practitioners views in Jordan as the location for this study, in order to
verify how far views and understanding reflected in the literature, and the use of
various terminologies, are relevant to the research context of the study. This will help
the researcher to ensure that survey questions are developed in a way that respondents
can understand at the quantitative stage. As mentioned in Chapter three, this study
adopts a semi-structured in-depth interview approach, in order to gather data that will
offer further clarification of participant views that may have been unavailable through
the use of other tools.
4.3 Sample Selection and Characteristics
The purpose of the study is to investigate factors affecting CRM adoption in
organisations. The complexity of CRM, as a result of varied stakeholders views of
what constitutes CRM within a complex business setting, lends itself well to the in-
depth interview method. Defining what constitutes CRM is complex, given that its
applications may be interpreted differently according to the perspectives of
stakeholders in different areas of business. As such, research methods for
investigating its properties need to be sufficiently flexible to reflect this complexity.
One such method for allowing flexibility is the in-depth interview. Hence, in-depth
interviews with various stakeholders are employed, which can be adapted to
accommodate the perspectives of a variety of stakeholders in different business
contexts, in order to achieve the study purpose.
In more detail, the complex nature of CRM systems has obliged the author to include
a wide variety of experiences and perspectives involved with CRM during the data
collection. The exploratory preliminarily study consists of nine in-depth interviews,
including a pilot exploratory interview, with a variety of marketing managers, IT
managers, senior managers and employees working with the CRM system from two
industries in the service sector in Jordan. In Jordan, the GDP share of the service
sector is 67% (JEDCO, 2011), representing the most prominent sector in the
economy. Hence, this sector is chosen as the focus for the research, and the sample of
participants is recruited from organisations in the service sector.
A convenience sampling method was adopted for selecting participants for the
interviews. In convenience sampling, the researcher selects convenient participants
whom are easily or simply accessible to the researcher. In the study, relevant
participants were accessed through personal contacts developed during the
researcher's residence in Jordan, and through publicly available information in the
trade press. The criterion for inviting potential participants to interview was based on
work status; that is, a potential participant had either to be a manager with overall or
93

partial responsibility of a CRM system, or an employee who was using CRM on a
daily basis. All participants would ideally have more than two years' experience in
managing or using CRM systems.
The author contacted fifteen senior managers of different organisations to conduct
appointments with the companies executive level. The aim of these appointments
was to introduce the study, provide the company with the participant information
sheet, as shown in the appendix 4.1, and to solicit participation. A follow-up email
was then sent to each senior manager who recommended participants and provided
contact details of potential managers and employees in the respective organisation. In
order to avoid any dependency issues or implicit pressure relations between a
companys executive level and employees, information about the research was
distributed to potential participants 24 hours in advance in order to give individuals
time to reflect on whether they wanted to participate or not. This was followed up the
next day with a short conversation with the researcher in order to ensure participants'
approval of the consent form. As a result, only nine out of fifteen potential
participants agreed to take part in the interviews. However, two of the nine
participants only briefly engaged in the interviews and answered only a few questions.
Nevertheless, their responses were taken into account as a valuable contribution to
new insights into some important issues surrounding CRM.
A pilot test of the interviews was conducted (July 2010) in a single session with one
manager at a regional bank in Jordan. The purpose of the pilot study was to determine
the time required for interviews. The pilot study was also valuable to test and learn
more about the content themes of the discussion and potential responses, the dynamics
of interaction, and the mechanics of discussion. Another eight interviews were carried
out after the pilot study, from September 2010 to October 2010. In order to facilitate
record keeping, all interviews were audio-taped with the approval of the participants.
The recordings were used to transcribe the collected data, as most of data is in the
form of text, which is easy to misunderstand. All formal research interviews were
audio-taped with the interviewees permission. Details of the sample are listed in
Table 4.1.
Table 4.1: Details of the Sample
Organisations Respondents job title
Bank A Strategic planning manager
Marketing manager
IT specialist
Relationship manager
Investment manager
Hotel B Front office manager
IT manager
Reservation Supervisor
Development manager

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Although a convenience sampling method was used for selecting organisations
participating in the interviews, the broad range of data generated was sufficient to
create an inclusive view of CRM adoption in Jordan. I was fortunate to have access to
a sample that enables me to identify challenges and best practices that organisations
are facing in varying sectors and at different maturity levels. Understanding
differences among organisations at different maturity levels would serve the purpose
of the study because it provides a variety of perspectives for understanding CRM and
an opportunity to explore a wide variety of issues and practices surrounding CRM.
It was difficult to schedule appointments with the managers or employees dealing
with CRM in Jordan; not only did they have busy schedules, few were motivated to
invest their time in academic research. As a result, nine interviews were conducted;
this number is consistent with the recommendations of Yin (2009) and Perry (1998).
A similar CRM study applying the same type of mixed methods rested on eight in-
depth interviews (Law, 2009). Because Law employed mixed methods, the small
sample size was not considered as a limitation. According to Hammersley (1992),
results can be compared across qualitative and quantitative studies (which would need
to have a larger sample) to establish the representativeness of qualitative research
findings.
All interviews were conducted in Arabic and recorded on tape. The interview
transcripts were translated into English, as described in Chapter three. Although time
consuming, the double or back translation was undertaken, with the rationale that
Translation is not merely representation or reproduction it creates something new
and unique (Mller 2007:210). On the other hand, transferring cultural meaning
from one language to another is considered as one of the most challenging tasks of
translation (Temple and Young, 2004), since there may be more than one way for
researchers to represent meanings resulting from the translation process. Hence,
choices of conducting the translation process have epistemological implications
(Temple and Young, 2004). It is ethical for researchers to acknowledge the role of the
translator in their research to establish critical translation, and to make clear that a
translated/target text is not a representation of an objective equivalence of the
original/source text but rather a construct of meaning reflected by a translator. The
intention is that the situated practice of knowledge production captures the intended
meaning (Rose, 1997; Mller, 2007), while being acknowledged that this is a
subjective reflection which inscribes the translators life and values into the
translation. The benefits are that employing translators may open up an opportunity to
explore different views about meanings (Temple and Young, 2004). On the other
hand, the choice of the translator and how to translate the data is determined by the
time period and funding available for the research. Translation services are expensive,
and if the translation is to be at a high standard appropriate to research, the process
can be very time consuming, requiring discussions between researcher and translator
about the research context and any related perspectives (ibid).
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In light of the above discussion, an independent translator was engaged for this study,
to carry out the translation process of the interview scripts from Arabic into English.
Following this, the author looked into the results from the previous step and translated
the scripts back to Arabic. The results were compared by the author of this study for
any mistranslation, inconsistencies, and missing meanings or phrases. Subsequently,
the author conducted some correction as it would have proven beyond the budget of
the study to further consult the translator or engage in further discussions. Finally, a
UK editor was consulted to advise the author on any loss of meaning resulting from
the translation process, and to tidy up any grammatical errors in the interview scripts.
4.4 Design of Interview Questions
According to Kvale (1996:95), interview questions should be based upon the thematic
research content and on the purpose of the investigation. Hence, an extensive review
of the CRM and CRM adoption literature across the marketing, management, and IT
disciplines was used for identifying the overarching general themes that should be
explored through the in-depth interviews. Semi-structured interviews with multiple
stakeholders working with CRM were carried out. First, the participants were asked
about their understanding and views on CRM, then about the development of CRM
practices in their organisations. Finally, the main discussion focused on drivers and
difficulties in adopting CRM. Some of the questions used to develop a discussion
within the interviews are summarised in appendix 4.3.
This research used semi-structured in-depth interviews. Thus, the researcher had a
predetermined list of suggested questions and themes to be discovered. But at the
same time, there was an open-endedness which allowed for refining and adding
questions which might follow up on the dimensions introduced in the initial question.
A variety of probes was used to elicit further follow-up questions or to build rapport
through the researchers use of active listening skills (Rubin and Rubin, 1995).
Furthermore, the interview questions were rephrased and explained accordingly, in
the case that any respondent was unclear about the questions. Following Seidman's
(1998) suggestion, a considerable effort was made to keep the questions short in order
to ensure that the participants were not overwhelmed in the interviews.
Prior to the interviews each participant was briefed about the purpose of the interview
within the broader context of the study. This helped to break the ice and get each
participant to say something and to feel involved. The interviews typically lasted
between 40 to 60 minutes, and were designed to be conducted as more of an informal
conversation than a formal interview. The resulting qualitative exploratory data
offered a novel insight into factors affecting CRM adoption in the participants'
organisations. A summary of the interviews is presented in appendix 4.4.


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4.5 Results and Hypotheses
This section presents and analyses qualitative data to develop and set up research
hypotheses and framework. This study builds on the literature review and the
interview results to develop a conceptual framework. All the interviews were recorded
and transcribed, and then the transcripts were audited against the recordings to have
the final texts ready for analysis. Eisenhardt (1989: 16) stated that analysing data is
the heart of building theory from case studies, but recognised that it is one of the
most difficult and least codified part of the process. In accordance with Eisenhardt's
(1989) suggestions, a within-case analysis (comparing data with theory) was used and
followed by a cross-case analysis (comparing data across cases). The within-case
analysis allowed unique patterns of each case to emerge, while the cross-case analysis
of two organisations identified similar themes and patterns across all cases. These
patterns should be derived from iterative rich comparative methods, by crossing
between data and emerging concepts thereby defining and refining the insights that
emerge (George and Bennett, 2005). This analysis method allows for an in-depth
understanding of the dynamics resident within a research setting and facilitates
numerous levels of analysis (Creswell, 1998).
4.5.1 CRM Meaning
The review of the literature demonstrates that the definition of CRM has evolved from
a confluence of marketing, management and IT disciplines. On one hand, scholars
from the business discipline broadly define CRM as incorporating business strategy,
relationship marketing, and customer-centric orientation (Buttle, 2004; Baker and
Hart, 2007; Gummesson, 2008). On the other hand, IT researchers narrowly define
CRM as a technology solution, and are more concerned with technology
implementation and use issues (Romano and Fjermestad, 2001; Goldenberg, 2008;
Greenberg, 2009). Most researchers lack both integrated and holistic views of CRM.
To reflect the different aspects of CRM, Paynes (2006) definition of CRM is adopted
in this study, as indicated in Chapter two: it is found to be one of the most relevant
and comprehensive definition of CRM. Payne (2006) defines CRM as a strategic
approach which focuses on the development of suitable relationships with key
customers and customer segments with the purpose of improving shareholder value.
In doing so, CRM ties in the potential of IT and relationship marketing strategies,
aiming to create profitable long-term relationship with customers, employees, and
shareholders. The goal of CRM is to manage the interaction with customers and
maintain long-term relationship marketing elements such as commitment, trust, and
satisfaction (Park and Kim, 2003).
Researchers in business literature have focused on business strategy, relationship
marketing, and customer-centric orientation (Baker and Hart, 2007; Buttle, 2008;
Gummesson, 2008). They also emphasised that CRM implementation should focus on
the essentials of relationship marketing as a customer strategy across all levels of
organisation (Goodhue et al., 2002), while the IT discipline should focus on the
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software applications use, design, implementation and support. Researchers in IT
literature have focused on making an efficient use of the technology to achieve value
for businesses, and it is more concerned with critical success factors involved in
technology implementation and use (Romano and Fjermestad, 2001; Goldenberg,
2008; Greenberg, 2009).
a) Case 1: Bank (A) in Jordan
The participants from the bank case study under investigation in this study pointed out
at the point of interview that they were only at an early stage in adopting CRM in their
organisation. They all had a common view which suggested that their banks use of
CRM was limited to their investment department dealing with the most profitable
customers (VIP). However, the bank was planning to widen the scope of their CRM
activity to include more departments and branches such as retail banking (the largest
department in the bank).
In accordance with the views developed in the literature review chapter, the views of
CRM amongst stakeholders in this bank, such as the relationship manager and the IT
manager (whether as actual or potentially future users of CRM), correlated in seeing
CRM as a set of processes and technologies that use information or data to build,
manage, and sustain long term relationship with customers. The objective of the bank
was to retain the most profitable customers by maintaining long-term customer
relationships. The following statements were given by three different stakeholders of
CRM at Bank A:
CRM is a process that helps the bank to organise customers information,
and to communicate with them It uses the technology to organise and
automate the information about the clients, and provide the employees with
the history of the clients transactions and calls, in a timely way, which will
facilitate and support building relationship with the clients in an organised
way. (Investment manager, Bank)
CRM is an information system that resolves business needs to manage
relationships with clients it helps the employees to record information about
the clients which can enable them to better manage the relationship with the
profitable clients (IT specialist, Bank)
CRM is a facilitator for enhancing our one-to-one relationships with our
profitable clients through managing our knowledge about them (Relationship
manager, Bank)
Most participants agreed on the basic idea of CRM, which is to manage customer
relationships by maximising the advantages of IT. However, a number of participants
emphasised that CRM is a strategy that serves cross-selling, delivering superior
customer values to desirable customers and segments, customers acquisition, and
customers loyalty. This is consistent with the literature review, which highlighted
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that CRM involves many elements including customers segmentation, acquisition,
profitability analysis, satisfaction and retention (Buttle, 2008). The following are
examples that illustrate such emphasis:

CRM is a company-wide business strategy implemented to reduce costs and
increase profitability by increasing clients loyalty. It brings information from
all data sources within the bank to offer one, holistic view of the clients in real
time it informs decisions on everything from cross-selling, segmentation,
profitability analysis, and communication channels in our competitive
market CRM helps us to cross-sell different services to different segments,
which will increase profits. (Strategic planning manager, Bank)

CRM is a concept to manage the relationship with clients. This concept is
implemented using a set of tools and techniques that facilitate building and
developing a direct relationship between the bank and the clients. It helps us
understand clients better in order to develop a customer-centric approach in
the bank. (Marketing manager, Bank)

After interviewing the participants, it was seen from the findings that the CRM
stakeholders had a good understanding about CRM. The above quotes showed
similarities as to the basic idea of CRM; the differences may be influenced by the
nature of each individuals job and responsibilities. Thus, marketing and corporate
managers seemed to define CRM as a strategic approach that underlines customer-
centric orientation. However, employees seemed to adopt a tactical approach which
viewed CRM as a technology used to process information about the customers, in
order to better manage long-term customer relationships. Consistent views were,
however, obtained from all the participants, and reflected accurately the
characteristics of CRM mentioned in the literature review chapter.

b) Case 2: Hotel (B) in Jordan
All of the four interviewed participants agreed in claiming their hotel to be highly
engaged with CRM. They argued that CRM was seen in their hotel as an essential
approach and business process to be used extensively across all departments. More
specifically, they claimed that CRM had become an umbrella system for co-ordinating
a large number of core business processes, and a facilitation point for cross-functional
work to achieve more effective and closer interactions with customers. As a result, all
employees valued CRM as a necessity for successfully expediting their jobs. The
following statements were taken from four different stakeholder-users of CRM at
Hotel B:

This system should be available and focused on helping our staff doing their
jobs effectively. The system is there to serve all parties in the Hotel in all
aspects. It serves employees; customers, guests, sales, and also serves,
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communications, accounting and revenues. For example, employees in our
outlets will be able to retrieve a customers name or phone number from the
smartcard linked to the system and which stores his/her information when
checking-in at the hotel. This system is an integral process in our customer-
focused environment in terms the workplace (Front office manager, Hotel).
CRM facilitates the reservations, check-in, check-out, and central billing. It
enables our workers to access and communicate all the information they need
to complete their jobs... We use CRM for segmentation to cross-sell different
products/services, and so increase our profits. (Reservation supervisor,
Hotel)

CRM is a central system that manages all aspects of business processes
including: central reservation, check-in, check-out, billing, and etc. Its central
database system serves to integrate and provide access to all customer
information and history." (IT manager, Hotel)

These views of CRM are relevant to the literature suggesting that CRM is essential for
businesses to integrate internal processes and functions to create value for targeted
customers (Buttle, 2004). Furthermore, Payne (2006) suggests that CRM enhances
opportunities to use information to understand customers and manage relationships
better. It is enabled through technology which facilitates the cross-functional
integration across organisations towards improving shareholder value. Whilst most of
participants from this hotel viewed CRM as an essential comprehensive set of
business processes for managing customer relationships, several of them also
emphasised that CRM is about segmentation, customer satisfaction, customer
retention, and cross-selling. The following are two statements that illustrate such
emphasis:

CRM is to understand different needs of customers in order to meet their
preferences by providing a one-to-one personalised service It facilitates a
better communication within the hotel and between the hotel and its
customers, in order to satisfy customers and maintain relationships with them,
in order to increase the profits and reduce costs. Additionally, it helps all the
hotels employees to perform their jobs efficiently. (Front office manager)

CRM is an inclusive set of processes and technologies for managing
relationships with potential and current customers. It centralises customer
information which would be used by employees across the hotel to serve
customers and sell suitable products/services at the right time... More satisfied
customers leads to more chances of retention and this can be done through
one-to-one relationships. (Development manager, Hotel)

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In Chapter two, the author of this study demonstrated that CRM analytical tools are
effective for segmenting customers and for focusing provision of individual and
unique service, according to customer need and heterogeneity (Roland and Verhoef,
2005). These analytical tools are also useful for predicting cross-selling opportunities
for different segments or individuals. Additionally, as mentioned in Chapter two,
CRM enables businesses to gain knowledge about customers and use it proactively to
create customer value and increase satisfaction, especially when knowledge about
customers is shared across all functional units (Feinberg and Kadam, 2002). On the
other hand, CRM should be used as means of retaining customers and reinforcing
their loyalty (Lee-Kelley et al., 2003).
c) Cross-Case Analysis
After interviewing the participants from both organisations in Jordan, it was found
that varied stakeholders had a good understanding of CRM, which matched the
existing academic views discussed earlier in Chapter two. Although consistent views
were gained from all participants, it seemed that there were some differences in the
perceived definitions of CRM among different stakeholders (managers and
employees). In particular, managers seemed to capture the strategic and broad
meaning of CRM more than employees and IT managers, who tended to perceive
CRM as an information system that manages aspects of customer relationships.

Kale (2004:44) stated that CRM mandates a synergetic combination of
interdepartmentally constructed strategies, programs and processes. The two cases
under investigation in this study represented a different level of engagement with
CRM. In the hotel case study, participants pointed out that they were highly engaged
with CRM, recognising that CRM was vital to integrate all of their business processes
to create value for customers and profits for the hotel. On the other hand, the case
study of the bank represented a use of CRM exclusive to the investment department
which deals with the top profitable customers of the bank. These two different
adoption levels seem to contribute to the differences between the two cases in
participant views of the significance of CRM. However, perceptions of participants
resembled the elements of CRM discussed in Chapter two. Therefore, the following
elements were kept in mind when designing the questionnaire in the later stage of this
thesis.

Business strategy to develop a customer-centric approach
Customer segmentation (micro segmentation and segmentation by expected
lifetime value)
Customer profitability analysis
Customer satisfaction
Long-term retention of selected customers
Cross-selling of products to targeted segments.
Customer value creation through integrated internal processes
Collecting and integrating information on customers
Using knowledge about customers proactively
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4.5.2 CRM Adoption

Employee Perception of CRM Benefits
After analysing the responses of different stakeholders about their individual
perception of CRM benefits strategies, most respondents appeared to have accepted
that CRM was beneficial to their organisation. Additionally, the in-depth interviews
identified subcategories of this stage according to the indicators used in the literature,
namely, with no particular ranking:
Gaining a competitive advantage.
Analysing customer requirements more efficiently.
Identifying new selling opportunities.
Increasing customer satisfaction.
Increasing customer loyalty.
Increasing customer retention rate.
Increasing revenue and profitability.
Increasing employee productivity.
Enhancing customer relationships.
This result was compatible with the finding of most previous studies about CRM
adoption (Wu and Wu, 2005; Ko et al., 2008). As a result, these elements were
suggested as the main indicators used to measure employee perception/attitude
towards CRM adoption. The quotations from respondents, shown below, illustrate
how different stakeholders from two different organisations perceived different
benefits of CRM and its adoption.
CRM enables the bank to develop a better understanding of the clients,
achieve a better access to targeted segments, and reduce the costs of
delivering services to clients (Marketing manager, Bank)

CRM is good because it increases clients satisfaction and bank profitability,
as CRM is not only about developing relationships with clients but also about
organising and directing this relationship to create profits for the bank
(Strategic planning manager, Bank)
OPERA is a user-friendly system and it is easy to use. It benefits the hotel
with the speeding up the reservation process and serving guests; it stores
information about every guest or potential guests and their personal
preferences so when a guest requests a service the system displays all his/her
history with the hotel. It facilitates the reservation process (check-in and
check-out). Besides, it allows employees to check on clients bills easily and
quickly. (Reservation supervisor, Hotel)
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According to Plakoyiannaki (2005), the perception of members of an organisation in
regard to CRM benefits mediates the impact of external factors on the implementation
of CRM within an organisation. The interviews conducted with practitioners in this
study confirmed that organisations should be committed to creating a positive attitude
to CRM among employees, before its implementation stage. The following are quotes
stressing such a suggestion:
CRM was developed to help the employees in carrying out their tasks, taking
into consideration that employees were trained in this system. Meantime, the
technology vendor/supplier of CRM system is always available to our requests
at any time to resolve our issues with CRM and serve the employees. This will
facilitate the work of the employees. (Front office manager, Hotel)
In our bank we prepare employees to accept and work with the CRM system
and they are also informed of how to properly deal with customers.
(Strategic planning manager, Bank)
Certainly, there are efforts to create a positive attitude to CRM among our
employees. These are represented in training the employees to implement the
system and internal marketing. These efforts are essential to conform to the
nature of the service we provide. The hospitality sector contains great
competition. Hence satisfying and serving customers are very important.
However, we have to support the employee in improving service by using
CRM. (Front office manager, Hotel)
On the other hand, one participant stated that the mediating effect of employees'
perceptions on CRM implementation and usage was not as significant, from her point
of view, as management's decision to implement CRM features, regardless of
employees perceptions. It is worth noticing that this view came from an IT specialist
deploying and maintaining a CRM system at its infancy stage. The respondents from
the same organisation also reported limited use of CRM in the organisation because
management commitment to it was ambivalent. It would seem therefore that different
stakeholders dealing with CRM might have different views on what most influences
the motivation to adopt CRM systems. According to Ross and Weill (2002), IT
personnel may know the technology but not how to apply it to business. As a result,
there is a risk that they may fail to take responsibility for organisational and process
changes required by CRM. The IT specialist in this study stated the following:
Management forced the employees to use CRM and that supported its
implementation hugely... Employees did not have a choice in using the CRM;
it was part of their job duties (IT specialist, Bank)

As a result, the following hypothesis is offered:

H1: Employee perceptions of CRM benefits mediate the effect of adoption
factors on an organisation's implementation of CRM.
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The multi-stage approach to understanding CRM adoption holds that employees
perception of CRM offerings mediates the influence of CRM adoption factors on
CRM implementation within an organisation. Building on this point, it is suggested
that the actual implementation of CRM within an organisation is a result of
employees positive attitude towards CRM.

CRM Implementation
At this stage, it is essential for businesses to integrate the three component parts of the
CRM: analytical, operational, and collaborative, in order to achieve successful CRM
implementation (Xu and Walton, 2005). Gefen and Ridings (2002) propose that
integrating these three types of CRM tools is important in order to develop a cohesive
whole CRM approach that creates an opportunity for improving customer
relationships, and achieving the full potential of any one of the types. Operational
CRM, also known as front-office CRM, is focused on automating business processes
through a variety of applications, including automation of marketing, selling,
segmentation, and product development. Analytical CRM, also known as back-office
CRM, is focused on capturing, storing, and analysing customer data to develop
values. Collaborative CRM is focused on communication as it covers interaction
between an organisation and its multiple possible channels to boot responsiveness to
customers. The analyses of participants responses suggest the following major CRM
features, given with no particular ranking, which were implemented in the two
organisations:
Personal customisation through customer database analysis.
Developing products through customer involvement.
Offering customer loyalty programs.
Offering real-time customer services.
Managing customer loyalty.
Managing customer complaints.
Developing member-only site in the organisations website.
Categorising/segmenting customers based on spending (lifetime value(.
Customising services depending on customers categories/segments.
Providing customers with information via email.
Developing sales promotion strategies.
Providing products and services in one place.
Automating cross-sell and up-sell capability.
These CRM applications or features are consistent with those reviewed in the
literature as discussed in Chapter two. In particular, this study follows Ko et al.s
(2008) suggested list of CRM technologies/strategies, as it is of the few studies which
makes a distinction between CRM adoption at individual and organisational levels.
Moreover, the list of technologies suggested by Ko et al. (ibid.) seems to integrate the
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three types of CRM tools (operational, analytical and collaborative), as discussed in
Chapter two. Some respondents have indicated the following during the interviews:

CRM refers to the importance of storing and updating customer data for
later intelligent analysis to benefit from it correctly. We communicate with
customers to update their data by sending them SMS posts along with their
bank statements, or asking them to update their data by email. All of this is
through the use of CRM to communicate with the clients, update their data,
and provide them with a better service. In addition, we are dealing with
government agencies to update each clients data, to know whether the client
is dead or alive. (Strategic planning manager, Bank)

CRM stores information about every guest or potential guest and their
personal preferences so when a guest requests a service the system displays
all his/her history with the hotel. It facilitates the reservation process (check-
in and check-out). Besides, it allows employees to check on clients bills easily
and quickly. (Reservation supervisor, Hotel)

CRM is linked to all functional units in the hotel. If a customer took a meal
from a restaurant, we would charge the value of bill to the customers
account; reservations would be recorded under the room number. In cases
where we wanted to know how many times the customer had used our services,
this system would give us that information. (IT manager, Hotel)

The best thereof is communication between customers and staff. E.g., the
customer will have an excess to book online, and such booking will reach us,
at the same time, all divisions will be able to exchange information in order to
serve the guest accordingly. (Front office manager, Hotel)
We implemented the first phase of the CRM project and intend soon to l move
on to the second phase. So far, we have used CRM to manage our
relationships with wealthy (VIP) clients. The approximate number of these
customers is currently around 500. Thus, we would benefit more from the
system if it was implemented in every branch and department of the bank.
Doing this would allow us to make a better use of the system. (Marketing
manager, Bank)

Although some CRM features/strategies, discussed in the literature, were not
mentioned explicitly or in detail by respondents, they were implied during the
conversation, as those features were very obvious for most participants. The above
extracts taken from the interviews suggest that CRM implementation seemed to be
differentiated between the two organisations. The first organisation (Bank)
demonstrated a low level of engagement with CRM, probably because CRM was at its
infancy stage, and only implemented in one department dealing with the most
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profitable customers of the Bank. On the other hand, the second organisation (Hotel)
demonstrated an extensive use of CRM and a high level of engagement with its
features.
4.5.3 Factors Affecting CRM Adoption
A) Strategic Plan
The analysis of interviews with various stakeholders from the two participating
organisation revealed strategic planning as one of the important themes of CRM
adoption. Strategic planning emerged as an important antecedent of CRM adoption.
Interviewers repeatedly emphasised that CRM is influenced by different categories of
strategic planning elements:

Clear direction and objectives embracing CRM strategy.
Covering CRM activities in the performance measurement system.
Development and integration of a strategic set of activities.

The conversations with the respondents demonstrated that under each category there
were subcategories associated with the main categories. A brief summary of the main
categories and subcategories are illustrated in Table 4.2.
Table 4.2: Subcategories Associated with Main Categories of Strategic Planning
Main Categories Subcategories
Clear direction and objectives
embracing CRM strategy.
Clear vision, objectives relevant to customer-
centric orientation, implementation plan linked
to business strategy.
Covering CRM activities in the
performance measurement system.
Approach of CRM is reflected in performance
measurement system, customer knowledge,
communication channels, customer loyalty, and
customer value.
Development and integration of a
strategic set of activities.
Top-down planning process, integration of
business functions.

i) Clear Direction and Objectives Embracing CRM Strategy.
After analysing responses regarding the clear direction and objectives of CRM, most
respondents stated that having clear objectives in their organisations influenced CRM
adoption. These statements reinforce the earlier literature review in Chapter two that
organisations need to have clear objectives and goals already in place in order to
maintain focus and efficiency of CRM adoption (Osarenkhoe and Benni, 2007).
Hence, in order to maximise employees' perceptions of CRM benefits, organisations
need to define specific goals and objectives for improving customer service (Sigala,
2004). The following quotations from the interviews are representative of the
concepts which surfaced:
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Like any other project in the bank, we have specified our goals we intend to
reach by adopting CRM, and the phases of CRM implementation. This is
because the bank will not invest in unclear threads or non- achievable
objectives. (Strategic planning manager, Bank)

The system is provided to maximise our relationship with customers and
large amounts of money were spent to serve this purpose. (Front office
manager, Hotel)
The conversations in the interviews also demonstrated that organisations need to
foreground a customer-centric philosophy in order to make the most of CRM
objectives and drivers. It can be seen from these interviews that organisations were
displaying a customer-centric philosophy via their awareness of the key objectives of
CRM. For instance, one respondent stated that:
Our adoption of CRM comes from the reality of our needs to satisfy clients,
and to compete with rival Banks for their custom, following best practices to
providing better services. Our goal is to adopt new communication channels
that are proven to be more effective than traditional channels; CRM reduces
the cost of financial transactions conducted at the counter desk in the bank.
(Marketing manager, Bank)
Improving relationship with clients is the core purpose of implementing the
CRM system, which helps us to provide a better service in saving clients' time
when they check-in, check-out or perform any transaction. (Reservation
supervisor, Hotel)
According to the literature, CRM adoption relies on the alignment of business strategy
and implementation plans (Ocker and Mudambi, 2003). According to the findings of
the interview, CRM becomes a business solution only when it is combined with a
suitable business strategy and implementation plan. Organisations seek to make wise
CRM investments especially given that CRM applications are rather expensive. One
of the IT managers interviewed indicated:
We articulated and detailed the business requirements document and sent it
to different CRM suppliers, and then they sent us their proposals. We were
directed to adopt those CRM projects which best serve and maximise
relationships with customers. (IT specialist, Bank)

Overall, the results from the interviews suggested that having clear direction and clear
objectives embracing CRM strategy is essential for CRM adoption. These statements
reinforce Brown and Vesseys (2003) suggestion that having clear CRM objectives
enables strong support among senior management, in order to create an organisational
environment that is conducive to effective implementation of CRM strategy across the
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organisation. In conclusion, it is important to have clear CRM objectives as this
enables people in business to perceive CRM as part of a customer-centric strategy: a
clear idea of customer needs facilitates CRM implementation (Bhrer and Mller,
2002). Therefore, the following is hypothesised:

H2: Having a direction and objectives that embrace a clear CRM strategy will
have a positive effect on employee perceptions of CRM.

Based on the above hypothesis, it is suggested that clear CRM direction and
objectives are basic criteria for employees perceiving and evaluating CRM as
potentially beneficial for their organisation, since these criteria provide accountability
for strategies geared toward customer focus. Alternatively, if management form
sufficiently clear objectives of CRM, then the employees will adopt the same attitude
in following CRM initiatives.

ii) Performance measures of CRM
In accordance with the literature, Payne (2006) suggested that in order to achieve
CRM objectives, organisations need to focus on measuring whether the strategic aims
of CRM have been delivered to an acceptable standard. After analysing the responses
in regard to CRM activities in the organisations performance measurement system,
most of the respondents stated that CRM should be reflected in performance measures
used in their organisation. Furthermore, their view was that performance measures
should translate into business vision and further measurable axes.
Some managers indicated the following during the interviews:
We have balanced scorecards which include four axes: financial aspects,
clients, employees, and operations. One of the main axes in the balanced
scorecards is concerned with client services. Therefore, managers' and
employees' performance in all branches is evaluated on the basis of the level
of service they provide for clients. Employees performance evaluation reflects
how effective they are in providing an excellent service level: whether by
attracting customers, reducing the number of complaints from customers, or
increasing customer satisfaction. The greatest priority for all employees is to
satisfy clients; this has a huge impact on their potential end of year bonuses;
about 40% of employee bonuses are based on client satisfaction. (Strategic
planning manager, Bank)
It was also found that in order for organisations to sustain improved business
performance, obtaining customer knowledge had become a vital element. Similarly, it
was found in support of ztayi et al. (2011) findings regarding performance measure
and its influence on CRM adoption, that using customer knowledge was a key
element of performance measurement supports.
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There is a questionnaire designed to obtain customer feedback about the
room in which they stayed. The management always checks whether
employees are effectively using customer knowledge created and shared by the
system. (IT manager, Hotel)
Getting a closer look at guests and our knowledge about them enables us to
serve them in a better way to match our services to their personal
preferences... The effective use of the system is part of the general
performance measures in our hotel. (Reservation manager, Hotel)
According to Payne (2006), the performance measurement systems used by
organisations are generally under-developed in measuring CRM performance and
aiding its adoption. The following extracts from interviews reaffirm Paynes
suggestion that performance measurement is an under-developed area with
insufficient attention to CRM and its goals. They also suggest the need for strong
management commitment to acceptable CRM performance measuring standards.
Our performance measurement covers the CRM system, but CRM still does
not have its own explicit separate scorecard. It is indirectly included when
evaluating client satisfaction and the level of service, as a modern marketing
approach...From my experience; CRM implementation needs time and
commitment. This is mainly because CRM is a complex system that includes
many aspects such as culture and strategy...This is why we need time to reach
the maturity state and include CRM in our performance measurement.
(Marketing manager, Bank)

CRM evaluation is supposed to take place. However, CRM implementation
was adopted to suit the business requirements of the investment department.
But because the investment department did not live up to expectations of
growth, this department is no longer a top priority on the bank agenda, and
the number of staff in the investment department has decreased. Because this
was the only department using CRM, their diminished presence led to a lack of
interest among management in assessing the performance of the CRM system.
Nevertheless, if CRM were to be used in other departments, such as customer
care, the management would most likely change their direction towards
including CRM in their performance measurement. (IT specialist, Bank)
Throughout the interview process, the results suggested that an appropriate
performance measurement system would help to evaluate CRM weaknesses and
strengths of performance but also aid in further understanding of CRM and its
implementation process. This is supported by several studies suggesting that
organisations focusing on the important of performance measurement are more likely
to perceive the benefits of implemented innovation (Morgan, 2004; Sawang et al.,
2006). Furthermore, Morgan (2004) stated that developing a performance
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measurement system that is flexible with employee attitudes is a real challenge for
organisations adopting CRM. Based on the interview results and the literature, the
following is hypothesised.
H3: appropriate CRM performance measurement mechanisms in an
organisation will positively affects employee perceptions of CRM benefits.
This suggests that organisations should focus on the importance of measuring CRM
outcomes and actual performance against their strategic plans. By doing so,
employees will be able to appreciate the potential achievements of CRM
implementation.
iii) Integration of Strategic Sets of Activities Around CRM
As mentioned in Chapter two: strategic planning processes should integrate strategic
sets of activities to allocate resources and manage challenges rising from CRM
adoption (Bohling et al., 2006). To enhance CRM benefits top management needs to
support CRM by linking its systems to business needs and transferring its
implementation to a wide spectrum of application (Sigala, 2004). Linking CRM
strategy to business needs is one of the main themes of this factor. Thus, in order to
maximise CRM benefits managers need to plan, support and integrate CRM with
business needs and processes. As one senior manager stated:

We prepare and explain to our staff why CRM is in the bank and serves their
best interests. This is to motivate staff to work with the CRM system, because if
employees were unaware of these benefits, they might be less motivated to
handle the system. Therefore we prepare our employees psychologically and
technically to do that. (Strategic planning manager, Bank)
Taking a different perspective, from an employee using CRM in the same
organisation:
The communication between the management and departments, like IT,
investment and marketing has affected employees acceptance of CRM.
(Relationship manager, Bank)
On the other hand, integration of business functions to serve customers is another
theme emerging from the interviews. Integrating business functions can produce
significant benefits and foster the CRM adoption process. However, the integration
should be executed carefully or employees' perceptions of CRM benefits would be
distorted (Day, 2002). Because it takes longer to reorganise and integrate business
functions than to plan changes, an over-lengthy reorganisation might tend to
undermine the perceived benefits of CRM. The following quotations demonstrate
different ideas that surfaced in the interviews.
Hotel (high engagement with CRM):
110

There was cooperation between departments as it was 100% up to them to
make the system successful. Our collaboration with departments was essential
as each department had their own requirements that we, as IT people, were
not aware of. (IT manager, Hotel)
Bank (low engagement with CRM):
We didnt consider CRM as an integrated process, as we only used CRM on
a small scale for limited features. (IT specialist, Bank)
There is an interest in the application of CRM and in benefitting from its
advantages. However so far we have not yet arrived at the stage of changing
our plans accordingly in order to expedite CRM adoption... The CRM
implementation needs time and commitment. This is mainly because CRM is a
complex system that includes many aspects such as culture and strategy. We
need time to reach the maturity state of CRM implementation (Marketing
manager, Bank)
Based on the interviews results and the literature, the following is hypothesised:
H4: Integration of strategic set of activities around CRM will have a positive
effect on employee perceptions of CRM.
B) Customer-centric Orientation
As mentioned in Chapter two: organisations attempting CRM in the absence of
customer-centric strategies routinely fail. Once strategies are focused on customers
values and relationships, decision makers in organisations can determine how best to
execute the strategies and then technology can enable the process (Abbott et al., 2001;
Plakoyiannaki and Tzokas, 2002). Since CRM has evolved from organisational
changes in customer-centric strategies, implementing it without re-engineering a
customer-centric business model results in its failure (Chen and Popovich, 2003).
Several previous studies have shown that a customer-centric approach involves
various elements that also are represented in the philosophical basis of CRM
(Bradshaw and Brash, 2001; Maklan et al., 2007). Customer-centric orientation is a
resourced and organised strategy which aims to satisfy profitable customers. It
involves key elements that are also characteristic of CRM, including customer
segmentation, acquisition, profitability analysis, satisfaction, and retention (Swift,
2000; Buttle, 2008).
Respondents in the interviews were asked whether they perceived that aligning
strategy, technology and process around customers influenced the added value of
CRM. The typical response to the question was a list of different customer-centric
elements driving CRM adoption, such as segmentation, acquisition, satisfaction, and
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retention. The following are examples of customer-centric strategies reported by
respondents:
In a service industry like hotel-management, we need to provide excellent
services to customers. Hence, we strive to offer customer-centric services to
our customers; services that match their needs. For this reason we use the
system as it enhances our understanding of customers, their needs,
profitability and satisfaction. (Front office manager, Hotel)
Serving customers is essential for our hotel and the adoption of the system
has enabled that. The system has allowed us to define our segments and to
analyse the most profitable ones. Since our focus is serving customers, all our
customers are important, especially the profitable ones who have high ratings
in the system. (Reservation supervisor, Hotel)
Bank (low engagement with CRM):
Focusing on customers and providing them with their needs are among the
organisational culture values. Our main vision is to provide an excellent
customer service; it is for this reason that we have applied CRM, in order to
achieve this vision... We use a different program rather than CRM to help us
segment and understand the most profitable and important clients... The intent
is to warehouse customer data and make it accessible for analysis to enhance
the understanding of client satisfaction and requirements. Effective CRM is to
create a powerful new marketing and referral force for the bank (Strategic
planning manager, Bank)
A customer-centric approach is essential and we align all our resources to
serve this approach. These resources include people, technology and process.
We value the client as an asset that drives our strategy and working process in
the bank.... CRM is a way to build a relationship with the clients. As a result of
the availability of rich data about the clients, CRM affects client satisfaction,
client loyalty, cross-selling and the quality level of customer care.
(Marketing manager, Bank)
As mentioned earlier, several studies have discussed the relationship between
customer-centric orientation and CRM adoption. However, not many studies have
explicitly focused on investigating the driving role of such a customer-centric strategy
to create strong perceptions of CRM. The results indicate that the two organisations
mentioned were at different stages of CRM implementation. However, it was seen
from the interviews that both organisations were aligned around serving customers
and hence perceived the benefits of CRM as a tool to enable customer-centric
strategies. The first organisation (Bank) was customer-oriented and perceived the
benefits of CRM although not yet in a position to reap its full benefits; for this it
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needed to reach a more mature stage of implementation. This is in contrast to the
second organisation (Hotel), which was already using CRM as a means to enable
customer-centric orientation. This suggests that customer-centric orientation helps to
create strong and clear perception of CRM benefits regardless of the implementation
stage of CRM within the organisation. In conclusion, customer-centric elements
positively influence employee perception of CRM. Based on this, the following are
hypothesised:
H5: Segmentation will have a positive effect on employee perceptions of CRM.
H6: Profitability will have a positive effect on employee perceptions of CRM.
H7: Acquisition will have a positive effect on employee perceptions of CRM.
H8: Satisfaction will have a positive effect on employee perceptions of CRM.
H9: Retention will have a positive effect on employee perceptions of CRM.
The above hypotheses propose that employees appreciate the benefits of CRM if their
organisations are already using traditional segmentation analysis, assessing customer
lifetime value in managing high value customer expectations, continuously attempting
to acquire new customers, emphasising customer satisfaction, and stressing customer
retention. In other words, in organisations where strategies have already been
developed to emphasise the importance of all the mentioned elements, also
characteristics of customer-centric orientation, then employees will be more
innovative and willing to accept CRM as a way of serving customers.
C) I nternal Marketing
It was reviewed in the literature that several studies drew attention to the potential
influence of internal marketing on CRM adoption (Christopher et al., 1991; Ling-Yee,
2011). The interview questions in this study were thus related to sub-factors of
internal marketing, including change management, communication, and rewarding
CRM usage. The main aim of these questions was to identify the main factors that
might influence employee perception of CRM. Under each sub-factor/main-category,
some subcategories were identified by grouping similar themes associated with the
main category.
The results from the interviews echoed a position taken in the literature that internal
marketing is essential for adopting CRM. The interviewees stressed that internal
marketing efforts in terms of change management, communication, and rewarding
CRM usage should be used to promote CRM among frontline employees who are the
organisations interface with its customers. Table 4.3 provides selective representative
comments from which the author identified main categories associated with sub-
factors of internal marketing.
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Table 4.3: Selected Representative Comments from the Respondents about
Internal Marketing Elements
Sub-factors Main categories Comments
Change
management
People
involvement
We prepare and explain to our staff why CRM is implemented in the bank to
help them understand that it is in their best interests. This is to motivate
them to work on the CRM system, because if the employee doesn't realise
the benefits of the system he/she will not be encouraged to handle it.
(Strategic planning, Bank)

There are efforts to create a positive attitude to CRM among our employees.
These are represented in training the employees to implement the system
and internal marketing methods... The hospitality sector contains great
competition...we have to support the employee in improving services by
using CRM. (Front office manager, Hotel)
Training Our Customer-focused culture and the good training provided to employees
promises successful adoption of CRM. In our bank we prepare employees to
accept and work with the CRM system and they are also informed of how to
properly deal with customers. (Strategic planning, Bank)
Internal
communication
Collaboration A cross-functional team, representing staff from all departments in the bank,
was formed to sponsor the change process. (Marketing manager, Bank)
Communication
system
The communication between the management and departments like IT,
investment and marketing affected employees acceptance of CRM. (IT
specialist, Bank)

In addition, the continuous attention and communication carried on
between IT people and each employee empowered employees acceptance of
the system. (IT manager, Hotel)

Communication between employees played a vital role as people involved
with the system will have certain experience in using it and they will share
and exchange information between them. The communication is carried out
through emails, maybe by phone, briefings, face-to-face, and through the
system itself. (Front office manager, Hotel)
Reward using
CRM
Individuals
performance
measurement
Using the system to improve customer service and avoid committing
mistakes when dealing with customers is among the criteria used to
determine the employee of the month. So employee use of the system is
indirectly rewarded through the evaluation of customer service. (Front
office manager, Hotel)
Employees performance evaluation is reflected in how effective they are in
providing an excellent level of service: whether by attracting customers,
reducing the number of complaints from customers, or increasing customer
satisfaction. The biggest priority for all employees is to satisfy clients and
this has a huge impact on their potential end of year bonuses. (Strategic
planning manager, Bank)
I have a goal, to generate a certain amount of sales monthly. So, to reach
my goal I use CRM, to help me manage my relationships with the customers
and to show to my supervisor how many calls and meetings I have
performed; thus, the confidence of my supervisor will increase accordingly
and will give me a good appraisal, CRM will evidence this. (Relationship
manager, Bank)
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The interviews suggested two main themes for change management, namely
employees involvement and training. These two elements were found essential for
promoting CRM for employees within an organisation. On one hand, involving
employees with CRM initiatives promotes a clear understanding and appreciation of
CRM benefits (Kale, 2004; Plakoyiannaki; 2005). On the other hand, training has
received considerable attention among researchers and is often associated with change
management (Schillewaert et al., 2005). Preparing and training employees is
fundamental at the early stages of CRM adoption in order to promote it as palatable
and compatible with organisation goals (Zablah et al., 2004).
From the interviews, two main themes were specified for internal communication,
namely collaboration and communication systems. Ryals and Knox (2001) suggested
that CRM adoption is a change process which requires collaboration within an
organisation. Consequently, managers should focus on communicating the drivers of
CRM since these elements would be key in shaping the perception of employees
across the organisation (Ramdani et al., 2009). This can be done by building a team
orientation and bringing different units of the organisation closer (Raman et al.,
2006). Alternatively, Finnegan and Currie (2010) refer to communication as
improving information sharing within and across the organisation to align the message
within the organisation that deals with external communication with customers.
Hence, intensive and high quality communication is instrumental in informing
employees about the nature of CRM initiatives.
The last sub-factor of internal marketing investigated in this study relates to the
measurement and reward of CRM usage within an organisation. Literature on the
subject indicates that a reward system, in the context of CRM, is crucial in shaping
employee behaviours (Ryals and Knox, 2001). Consistent with the preceding
argument, Plakoyiannaki (2005) confirms that the right reward system facilitates
CRM implementation by boosting employees motivation towards CRM and reducing
their resistance to change. Furthermore, the right reward system should acknowledge
the contributions of individuals in sensing and responding to CRM initiatives.
Consistent with the preceding arguments, internal marketing elements are suggested
to be of central importance in CRM adoption as each element represents cues that
organisational members rely on in judging CRM benefits. Accordingly, the following
are hypothesised:
H10: change management in an organisation will have a positive effect on
employee perceptions of CRM.
H11: Internal communication in an organisation will have a positive effect on
employee perceptions of CRM.
H12: Rewarding CRM usage will have a positive effect on employee
perception of CRM.
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H10 proposes that if an organisation, in the process of incorporating CRM into its
changing business strategy, involves and trains employees, then this process of change
will contribute to improvements in employee perception of CRM. According to H11,
collaboration and communication within organisations, to build employee
understanding and motivation for CRM adoption as part of a new working
environment, are vital for shaping positive employee perception of CRM.
Alternatively, Hypothesis C12 indicates that rewarding employees for their effective
use of CRM in providing excellent customer service, encourages them to work with
CRM.
D) Culture and leadership
In accordance with the literature, the people (employees) element involving
organisational culture and leadership elements is one of vital factors affecting CRM
adoption (King and Burgess, 2007; Osarenkhoe and Bennani, 2007). Specifically,
organisational culture and leadership shape the characteristics of peoples perception
of CRM and readiness for change (Minguzzi and Passaro, 2001). Thus in this study
the interview questions were related to sub-factors of culture and leadership:
resistance to change, supportive culture, and leadership. Under each sub-factor/main-
category, some subcategories were identified by grouping similar themes associated
with the main category.
The results from the interviews repeatedly emphasised the powerful impact of culture
and leadership in an organisation. The interviewees stressed that culture and
leadership in terms of resistance to change, supportive culture, and leadership do
influence peoples perception of CRM. As depicted in Table 4.4, selective
representative comments are offered, from which the author identified main categories
associated with sub-factors of culture and leadership.









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Table 4.4: Selected Comments from The Respondents about Culture and
Leadership
Sub-factors Main categories Comments
Resistance
to change
Personal
characteristics of
management
Although the management has supported this CRM approach,
the level of support has varied at senior level, as some
managers are innovative and like technology while others are
nervous about new technology. (Marketing manager, Bank)
Employees do not fear the system as it is dedicated to serve
them alongside the customers...There were no fears about
losing jobs, but rather about making mistakes at the outset of
implementation of the system. As management, we understood
the case and we built in a margin for errors. (Front office
manager, Hotel)
Employee resistance to change depends on the management
style used in promoting the change, how it might exploit staff
potential or restructure the bank working process. It is essential
that managers clearly and explicitly explain to staff that CRM
would change their working process but wouldnt cause them to
lose their jobs. (Strategic planning manager, Bank)
Employees
resistance to
change
People were questioning its approach and benefits. There was
no objection but people had questions about CRM and its
benefits; this demonstrated unawareness of the CRM concept
and its benefits. (Marketing manager, Bank)
At the beginning employees resisted the CRM system. Like any
new system there was a fear of the system and their ability to
use it, especially that CRM necessitated training. (IT specialist,
Bank)
Supportive
culture
Learning climate Proper training was provided to all employees and there were
meetings between employees from the reception department to
discuss their feedback on the system and its usage to provide a
better customer service. (Reservation supervisor, Hotel)
The employees used to hold meetings in the presence of the
director to communicate and discuss any issues around Opera.
(IT manager, Hotel)
Organisational
climate
The implementation of CRM is a decision from the top
management and I believe that cultural values played a role,
since the employee had no desire to use the system.
(Relationship manager, Bank)
Leadership Management
support
The leadership is very important; the management manifests
this role in taking responsibility for preparing employees for the
new system in regard to all managerial operations relevant to
the system. The top management assisted in providing
technology applied in the hotel. (IT manager, Hotel)
The leadership support is important because CRM is an
innovative approach and it needs a champion to positively
change people's attitudes towards the adoption of CRM. And of
course, the top management support is vital for CRM adoption
as it was their decision to purchase this system. (Marketing
manager, Bank)
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Throughout the interview analysis, the challenge of employees resistance to change
was observed within the two organisations. Behavioural resistance to change
manifested in peoples unwillingness to adopt/utilise CRM tools (Zablah et al., 2004).
In accordance with the literature, Bull (2003) and other researchers suggested that
resistance to change creates a high level of uncertainty, preventing organisational
members from valuing the benefits of CRM. Personal characteristics of management
and employee resistance to change were the main themes emerging from the
interviews. First, accepting CRM in organisations can be confronted by peoples
resistance to change (Bohling et al., 2006). Hence, a high level of top management
commitment to facilitate the change and overcome resistance is vital to conquer this
challenge. Second, CRM adoption can bring a resistance to change to the innovation
itself and disagreement among different departments might result (Premkumar and
Roberts 1999). Consequently, resistance to change may be articulated through the
expression of negative beliefs about CRM (Piderit, 2000).
From the interviews, there seemed to be a wide agreement that supportive culture
covers two main elements: learning climate and organisational climate. The learning
climate is linked to long-term strategic orientation and refers to the degree to which an
organisation develops new knowledge (Calantone et al., 2002). Researchers
emphasise the importance of learning climate in fostering CRM adoption (Goodhue et
al., 2002; Payne, 2006). Such learning may consist of changes in employees
knowledge and changes in attitudes toward CRM. Apparently, communication across
an organisation in order to enhance shared individual and functional expertise is
critical to promote employees learning and hence satisfaction with CRM (Swift,
2001). It is observed from the interviews in this study that differences arose between
the two organisations (Hotel and Bank) in terms of the emphasis placed on the role of
communication in enhancing organisational learning. The hotel, adopting CRM at the
maturity stage, seemed to grasp the concept of integrating knowledge, organisational
learning and business process to benefit from CRM and deliver value to customers.
Conversely, the lack of ability to achieve such integration was observed in the bank
case.
For successful CRM adoption to occur, organisations are required to manage their
organisational climate (Payne, 2006). However, several studies report that the chief
impediment to CRM success is often a disruptive organisational climate and
organisational culture (Clark and Smith, 2003; Chen et al., 2009a). The organisational
climate is constructed by its members through key elements of the organisation in
terms of its systems and practices. As depicted in the Table 4.4, the interviews in this
study confirmed that negative organisational climate and culture values in the first
organisation, the bank, were hindering CRM adoption. This suggests that
organisations need to attempt to manage their organisational climate in order to
support delivery of effective CRM solutions.
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The last sub-factor of organisational culture and leadership factor is leadership. Extant
research shows that the role of the individuals taking leadership in the CRM adoption
process may influence employee perceptions and commitment toward CRM (King
and Burgess, 2007). A considerable debate is found in the literature concerning the
capacity of management to take on leadership responsibilities in preparing
organisational culture. Poor capacity may be due to management short-term
orientation (Ryals and Knox, 2001), underestimation of responsibilities (Maklan et
al., 2007), or failing to see CRM as a holistic approach (Maklan et al., 2007).
However, scholars concur in emphasising the importance of top management support
and commitment in sponsoring CRM initiatives as essential for changing employees
attitudes and preparing them for CRM adoption (Payne, 2006; Finnegan and Currie,
2010). The interviews in this study, as shown in Table 4.4, confirm such assertions.
Concluding that organisational culture and leadership are vital for improving
perception of CRM in an organisation, this study suggests the following hypotheses:
H13: Resistance to change in an organisation will have a negative effect on
employee perceptions of CRM.
H14: Supportive culture in an organisation will have a positive effect on
employee perceptions of CRM.
H15: Leadership in an organisation will have a positive effect on employee
perceptions of CRM.
H13 implies that when management is facing problems with fitting CRM into the
overall culture of the firm, then employees may question the value of CRM. H14
denotes that support from organisational members in helping employees to learn new
ways of working with customers, and in aligning CRM practices with shared beliefs
and values in the organisation, encourages positive employee perception and
evaluation of CRM values. H15 refers to the importance of top management support
and commitment to preparing employees for the adoption of CRM.
E) Project Management
As noted in the literature, CRM adoption demands a great deal of project management
to ensure its credibility (Payne and Frow, 2006). The majority of interviewees
normally expected CRM projects to be managed and monitored for changes in similar
ways to a software project. The interview questions were associated to two main sub-
factors of project management arising from the literature: project management
techniques and project change control. For each sub-factor, some main categories
were identified by grouping similar themes.
The results from the interviews suggested considering CRM as a set of activities
which are expected to produce outcomes within a particular time period. This can be
achieved by considering CRM as a software project for which specific techniques and
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procedures are used to help with formulating priorities, management and monitoring
stages. Table 4.5 represents selected comments from which the author identified main
categories associated with sub-factors of project management.
Table 4.5: Selected Representative comments from the Respondents about
Project Management
Sub-factors Main categories Comments
Project
managemen
t techniques
Clear priorities The planning stages of the project started with
building clear objectives of what we wanted to achieve
at each stage in the project. (Strategic planning, Bank)
The implementation of CRM had different stages:
training, installing, migration of data, evaluating and
maintenance. (Front office manager, Hotel)
Project schedule We used Microsoft project management software to
design the timeline frame of the CRM project. (IT
specialist, Bank)
Managing
changes in
projects
Monitoring
projects
We updated the timeline frame and milestones status
on an ad hoc basis to reflect the project progress and
delays. We also conducted a risk management analysis
for the project. (IT specialist, Bank)
Adjusting
project plans
Employees required some modifications on the system
in order to customise the system to our context in the
hotel. (Reservation manager, Hotel)

Throughout the analysis of interviews scripts, the usage of project management
methodologies was observed at the two organisations. The initialisation of CRM was
organised according to project management techniques. In addition, milestones,
business and technical specifications, and measured deliverables were set up.
Similarly, Somers and Nelson (2001) found that achieving the right proper project
scope and timetable in collaboration with all stakeholders is important in driving
CRM credibility. Furthermore, doing so ensures that the actual picture regarding
CRM objectives is clearly known to all concerned stakeholders. Hence, creating and
managing appropriate plans, goals, and schedules is a necessity to the premise of
CRM projects (Kostojohn and Johnson, 2011).
The second sub-factor of project management is control of project changes. In this
study, the results in general supported the premise that understanding the function of
change in CRM projects involves monitoring and adjusting for unexpected changes or
risks. Because of the complexity of CRM and its involvement with different parties,
continuous change of requirements is unavoidable. Wilson et al., (2002) recognised
the needs to monitor and control CRM projects in order to ensure flexibility and
continuous improvement. The findings of this study suggest that the purpose of
project control is to keep the project as close to the plan as possible, but still change
its specification accordingly to user requirements.
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In line with the interview results and relevant literature, it is proposed that the
development of project management enhances employees' acceptance of CRM.
Accordingly, this study suggests that organisations which enjoy more developed
project management techniques and capacity to manage change in CRM projects will
be more successful. Accordingly, the followings are hypothesised:
H16: Project management techniques in an organisation will have a positive
effect on employee perceptions of CRM.
H17: Managing changes in CRM projects will have a positive effect on
employee perceptions of CRM.
H16 states that the use of project management techniques to provide appropriate
project schedules, and clear priorities for CRM implementation plans, plays a major
role in addressing employees perception of CRM. H17 claims that managing changes
in CRM projects, through monitoring project progress and adjusting project plans,
influences CRM perception amongst employees.
F) I nnovation
In the realm of IT, researchers are concerned with CRM usage and implementation
factors, suggesting that system use has a strong effect on employees attitude and
intention to use CRM (eg: Pai and Tu, 2011). Researchers of information technology
have, thus far, applied a technology acceptance model (TAM) developed by Davis
(1989), to investigate CRM acceptance. Within the TAM, there are two main
constructs influencing peoples intention to use CRM: these are perceived ease of use
and perceived usefulness. Accordingly, in this study the interview questions were
related to these two constructs as sub-factors of innovation. The main aim of these
questions was to determine whether perceived ease of use and perceived usefulness
influenced employee perception and intention to use CRM.
The results from the interviews confirmed the appropriateness of the TAM model to
explain employees behaviour towards CRM and indicate that the two sub-factors,
perceived ease of use and usefulness, are important drivers to create engagement with
the system. The findings are described in relation to key themes of each sub-factor
resulting from the interviews, as summarised in Table 4.6.





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Table 4.6: Selected Representative Comments from the Respondents About
Innovation Characteristics
Sub-factors Main categories Comments
Perceived
ease of use


Clear The system is easy and clear to use, even new staff can use it
easily without much training. (IT specialist, Bank)
Its usage should be easy and clear to employees so that they
can perform their work. This is important as it affects their
interactions with clients, for instance, we do not want an
employee to ask the same information from the client more
than once. (Strategic planning, Bank)
Ease The system is easy to use and this has encouraged employees
to use it. Especially after training them to use the system.
(Front office manager, Hotel)
It is very easy to use and user-friendly. Otherwise, employees
wouldnt be happy to use it. (Reservation manager, Hotel)
Perceived
usefulness
Performance It enables me to perform my job in the most effective way.
Different departments are involved with different part of the
system: as a reservation we use the system to display customer
profiles in order to understand customers and their personal
preferences. And the system is very effective for doing so.
(Reservation supervisor, Hotel)
Useful Employees now think of CRM as a necessity to complete their
job. (Strategic planning manager, Bank)

The overwhelming majority of the respondents reported that innovation characteristics
of ease of use and usefulness were major drivers to their use of CRM. However, one
respondent reported that system ease of use was not that important; nevertheless
usefulness was reported as the main reason for using CRM. This respondent was a
marketing manager and stated the following:
The system is clear and easy to use, but this is not the main reason for using
it. I use it because I need to meet my job responsibilities and benefits of the
system. (Marketing manager, Bank)
The first sub-factor of innovation characteristics is perceived ease of use (PEOU). The
majority of the respondents reported that PEOU means that CRM is easy and clear to
use. In the literature, "easy" and "clear" are frequently the most salient indicators for
measuring this construct (Venkatesh and Davis, 2000). Thus in the study respondents
agreed that PEOU had an effect on the acceptance and use of the CRM system. They
also indicated that they preferred simple and user-friendly systems which only require
quick and basic training. This is compatible with Alshawis et al. (2011) findings
suggesting that PEOU directly affects employees attitudes to CRM.
The second sub-factor of innovation characteristics is perceived usefulness (PU). All
interviewees reported that CRM was useful and helped them to perform their jobs
effectively. This is supported by the literature referring to PU as individual
recognition of the advantages of using technology to perform jobs within
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organisational contexts (Davis et al., 1989). In this study all interviewees agreed that
CRM is useful for customers segmentation, acquisition, cross-selling, profitability
analysis, satisfaction, and retention. Each case participant expressed that CRM was a
great help in performing their jobs and they specifically valued CRM features that
were relevant to their job responsibilities. Evidence appears to support such claims
from studies that investigated the relationship between PU and user acceptance of
CRM (Avlonitis and Panagopoulo, 2005; Alshawi et al., 2011).
Drawing upon interviews and theoretical rationale, this study proposes that innovation
characteristics (PEOU and PU) are associated with employee acceptance of CRM.
Accordingly, the following are formally proposed:
H18: Perceived ease of use of CRM system will have a positive effect on
employee perceptions of CRM.
H19: Perceived usefulness of CRM system will have a positive effect on
employee perceptions of CRM.
G) Knowledge Management
A further new factor is related to the IT discipline, which can be summarised as
knowledge management capabilities (KM). Although this factor was not considered
by the author of this study before conducting interviews, it was one of the main issues
arising from the interviews. In other words, respondents in all interviews raised
concerns suggesting knowledge management capabilities as essential processes to
establish an organisations ability to benefit from CRM initiatives. Moreover it was
found that these capabilities varied between the two organisations under investigation
in this study.
The first organisation (Bank) reported that as CRM was in its infancy; its processes
were not based on capabilities related to knowledge management. However,
respondents from this organisation emphasised that KM is essential and as such,
therefore needed for effective CRM. Dous et al. (2005) explained that some
organisations may neglect KM in CRM due to the difficulty of realising immediate or
short-term benefits of relative projects. On the other hand, the second organisation
(Hotel) reported a high level of engagement with CRM initiatives. Respondents from
the hotel seemed to view KM as a main sub-process of CRM, which enabled
organisational learning and achievement of CRM goals. Although the organisations
were at two different adoption levels, they both considered knowledge management
KM as a fundamental requirement to reap the full benefits of CRM. The following are
statements reaffirming such findings:
Responses from the first organisation; Bank A with low level engagement with CRM:
We use CRM to manage our relationships with wealthy clients and the
approximate number of these customers is currently around 500 customers.
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However, we would benefit more from the system if we implemented it in every
branch and department of the bank. Doing this would allow us to use make a
better use of the system. (Marketing manager, Bank)

CRM is not applied in an integrated way so far; it is not implemented
everywhere in the bank. We have already started to implement the first phase
of the CRM project. But our plans and estimation of how it serves the Bank
begins with the development of a data cleansing process: aiming to cleanse
and update customer data. (Strategic planning manager, Bank)
Responses from the second organisation; Hotel B was highly engaged with CRM:
This system should be available to and focused on helping our staff do their
jobs effectively. The system is there to serve all parties of the Hotel in all
aspects. It will serve employees; customers, guests, sales, and also serve
communications, accounting and revenues. The Outlet, as an example, will be
able to know the customers name or the phone number from the smartcard
linked to the system... This system is integral in terms of the processes of the
hotel. (Front office manager, Hotel)
By considering that knowledge management development provides people with useful
linkage between innovation and its benefits (Carneiro, 2000), we acknowledge that
employee perception of CRM depends on KM evolution. The results from the
interviews suggest including KM as one of the key drivers to CRM adoption. These
results also suggest that KM splits into three groups of sub-factors: capturing
knowledge, managing knowledge and transmitting knowledge. This confirms the
discussion of Alavi and Leidner (2001) considering KM as the process of capturing,
managing and transmitting knowledge through the organisation and across
organisational boundaries. In order to assess business benefits of knowledge
management, relevant capabilities must be taken into account. The capabilities
prescribed in this research are primarily: capturing knowledge, managing knowledge,
and transmitting knowledge.
Throughout the interview process, two main themes were determined for capturing
knowledge, namely establishment of a knowledge repository system, and continuous
update of knowledge. According to Croteau and Li (2003), storing and updating
relevant knowledge for CRM initiatives calls for the deployment of KM. Although
relevant literature differs between making knowledge about, for and from customers
(Gebert et al., 2003), it was observed in the interviews that organisations were more
concerned with creating knowledge about customers. Collecting knowledge about
customers is one of the oldest forms of KM that enables the application of CRM in
organisations (Reichheld and Schefter, 2000). Besides knowledge about customers
and past transactions encompasses present needs and future desires. Knowledge about
customers can be captured directly through employees, and indirectly through
business intelligence tools such as data mining or data warehouses. The following are
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representative comments associated with the main themes of capturing knowledge
sub-factor:
The first theme, establishment of knowledge repository system:
We have assigned an integrated team in the bank to detect any lack of
customers data. For example, we need to know the customer's date of birth,
who is responsible (in case the account holder is a child) of his/her account,
who can withdraw money from his/her account...This refers to the importance
of storing and updating customer data for later intelligent analysis to benefit
from it correctly. (Strategic planning, Bank)
This system enables us to recognize some information about the clients, such
as date of birth, preferences, smoker or non-smoker, does the customer suffer
from allergy, does the customer prefer particular things in the room or not.
(Front office manager, Hotel)
The second theme, continuous update of knowledge:
We are aiming to cleanse and update customer data. For example, updating
the marital status for a client who was a bachelor and student twenty years
ago, but is now a married businessman, or if he was a tenant and now a house
owner. And therefore when we update customer data we can understand them
more. (Strategic planning, Bank)
We communicate with customers to update their data by sending them SMS,
sometimes forms are sent to their posts alongside with their bank statements,
or asking them to update their data by email. (Strategic planning, Bank)
The second sub-factor of KM is the process of managing customer knowledge. The
overwhelming majority of respondents reported that utilising information from
different functional units to address the needs of their customers was essential to
realising benefits of CRM. This confirms Rigby et al. (2002) suggesting that the
proper handling of customer data is essential for business to justify CRM initiatives.
Hence, organisations should make use of relevant knowledge to make truly customer-
centric marketing decisions. Respondents said the following about this aspect of
knowledge management:
A unified account number (ice number) is used to consolidate all client
accounts into one account, even if a person holds more than one account. This
is an important area where the CRM can help us to deal well with customers
through the unified account. (Strategic planning, Bank)
CRM provides us with sufficient information about customers in order to
achieve dual values for customers and the bank. It helps us ensure that we
125

provide clients with the right services at the appropriate time and in the right
place according to the nature and type of client. (Strategic planning, Bank)
The last sub-factor of KM is transmitting customer knowledge across an organisation.
The results of the interviews stressed the important role of distributing relevant
customer knowledge for CRM processes. In practice, customers interact with different
people and departments at different levels. Essentially, a synergistic combination of
knowledge sharing with CRM expands the latter from its technology-oriented
approach, enabling it to include both technological and people orientations. Consistent
with this notion, several studies have emphasised that CRM has evolved from
designing suitable processes and technologies supporting coordinated information
shared throughout all customer channels (Lee-Kelley et al., 2003). There is an
increased sense of urgency in the need of well-designed KM due to the fact that
knowledge sharing is essential to serve customers (Garrido-Moreno and Padilla-
Melendez, 2011). Knowledge sharing results in many benefits including cost
avoidance, improved productivity, and sharing experience. However, this capability
requires collaboration and mutual support among functional units for CRM
deployment (Dong, 2012). The following quotes emphasise the role of knowledge
sharing in this study:

The rest of the phases should be applied, and the management should link the
system integrally with the other branches/departments like retail. This
integration will make the system more useful; will reduce time and routine
work. (Relationship manager, Bank)
The system helps integrating our knowledge about customers with all
branches over the world, as we all use a central online database which has
information about all customers who have dealt with any branch of our
company across the world. (Reservation manager, Hotel)
90% of the divisions have a relationship with the system, even the cleaning
team. For example, it includes IT, accounting, operators, reservation, sales,
and bills divisions. The system makes customer information available to all
divisions at the hotel. Every division uses different features of the system as
relevant to the nature of the job and type of interaction with clients. So, the
system is very beneficial to everyone in the hotel. (IT manager, Hotel)
Consequently, knowledge management capabilities (capture, manage, and transmit)
are indispensable perquisites for employees to realise the benefits of CRM. On this
basis, the following hypotheses:
H20: Capturing customer knowledge will have a positive effect on employee
perceptions of CRM.
H21: Managing customer knowledge will have a positive effect on employee
perceptions of CRM.
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H22: Transmitting customer knowledge will have a positive effect on employee
perceptions of CRM.
These hypotheses are concerned with the knowledge management capabilities within
an organisation and their positive influence on employees perception of CRM. H20
states that that organisational ability to collect and store knowledge about customers
promotes CRM offerings to employees. H21 implies that organisational ability to
manage customer knowledge will lead to better understanding of CRM amongst
employees. H22 suggests that organisational capability to engage with the process of
sharing knowledge helps employees to foresee reciprocation or even benefits of CRM.
4.6 Conceptual Framework
Figure 4.1 depicts the conceptual framework developed by integrating extant studies
with the exploratory interviews conducted in this study. This proposed model was
based upon an attempt to develop a holistic view of CRM adoption. Two main phases
were used to achieve that purpose: i) multi-disciplinary review of CRM and its
adoption, and ii) in-depth interviews with varied stakeholders. The factors in the
conceptual framework originated from the literature were tested for relevance and
refined, based on in-depth individual interviews with varied practitioners. As a result,
these two sources helped to generate two adoption stages/factors and twenty one sub-
factors as related to each concept in the conceptual framework, as shown in Figure
4.1.
Figure 4.1: Proposed Conceptual Framework 1

The conceptual framework originated twenty two hypotheses which will be tested in
the empirical quantitative stage of the study, as shown in Table 4.7.
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Table 4.7: A List of Hypotheses
Relative
concept
Number Hypotheses
Adoption H1 Employees perceptions of CRM benefits mediate the effect of
adoption factors on an organisation's implementation of CRM.
Strategic
planning
H2 Having a direction and objectives that embrace a clear CRM strategy
will have a positive effect on employee perceptions of CRM.
H3 Strategically covering CRM performance measurement mechanisms
in an organisation will positively affects employee perceptions of
CRM benefits.
H4 Integration of strategic set of activities around CRM will have a
positive effect on employee perception of CRM.
Customer-
centric
orientation
H5 Organisations emphasis on segmentation analysis will have a positive
effect on employee perceptions of CRM.
H6 Organisations emphasis on analysing customer profitability will have a
positive effect on employee perceptions of CRM.
H7 Organisations emphasis on customer acquisition will have a positive
effect on employee perceptions of CRM.
H8 Organisations emphasis on customer satisfaction will have a positive
effect on employee perceptions of CRM.
H9 Organisations emphasis on customer retention will have a positive
effect on employee perceptions of CRM.
Internal
marketing
H10 Change management in an organisation will have a positive effect on
employee perceptions of CRM.
H11 Developing internal communication in an organisation will have a
positive effect on employee perceptions of CRM.
H12 Rewarding CRM usage will have a positive effect on employee
perceptions of CRM.
Culture and
leadership
H13 Resistance to change in an organisation will have a negative effect
on employee perceptions of CRM.
H14 Supportive culture in an organisation will have a positive effect on
employee perceptions of CRM.
H15 Leadership in an organisation will have a positive effect on
employee perceptions of CRM.
Project
management
H16 Project management techniques in an organisation will have a
positive effect on employee perceptions of CRM.
H17 Managing changes in CRM projects will have a positive effect on
employee perceptions of CRM.
Technology
acceptance
model
H18 Perceived ease of use of CRM system will have a positive effect on
employee perceptions of CRM.
H19 Perceived usefulness of CRM system will have a positive effect on
employee perceptions of CRM.
Knowledge
management
capabilities
H20 Capturing customer knowledge will have a positive effect on
employee perceptions of CRM.
H21 Managing customer knowledge will have a positive effect on
employee perceptions of CRM.
H22 Transmitting customer knowledge will have a positive effect on
employee perception of CRM.
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4.7 Summary
This chapter sets out to discuss the interviews from the qualitative study as inputs into
generating a conceptual framework of factors, which were thought relevant in
understanding the CRM adoption process. In-depth interviews with various
stakeholders from two different organisations (Bank A and Hotel B) were employed
to identify those factors. Nine practitioners from different functional units and at
different organisational levels in Jordan were interviewed. Interviews were analysed
by comparing data against the literature as well as comparing data in one case with
other cases. For example, analysis of responses concerning knowledge management
capability indicated that results were compatible with the finding of most prior studies
of CRM adoption. However, significant differences between the two cases (the bank
and the hotel) were observed. On one hand, the respondents from the Bank case study
reported that although CRM was not based on capabilities related to knowledge
management, they emphasised that KM was essential and therefore needed for
effective CRM. On the other hand, respondents from the Hotel case study seemed to
consider knowledge management capabilities as a main sub-process of CRM, which
enabled organisational learning and achievement of CRM goals.

The interview results indicated that the views of interviewees were consistent with the
reviewed literature of CRM and its adoption. Furthermore, the results suggested
adding knowledge management capabilities as key drivers of CRM adoption. The
combination of interview results and the reviewed literature were keys for the
development of 22 hypotheses. As a result a conceptual framework depicting the 21
factors affecting employees perception of CRM, and the employees perception
affecting CRM implementation was proposed, see Table 4.8. In the next stage of the
study, this conceptual framework will be tested in the quantitative study.

Table 4.8: A List of Sub-Factors for each Factor in the Conceptual Framework 1

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From the marketing point of view, the results from the interviews suggest that CRM
should be considered as a concept that provides improved value to the customer.
Hence, the essentials of customer-centric orientation of an organisation should be seen
as coexisting with and facilitating the interest of employees in CRM, as an effective
business approach. Table 4.8 illustrates this notion in which elements of a customer-
centric approach are proposed to influence understanding of CRM values amongst
employees. In particular, a customer-centric orientation places customer profitability,
segmentation, acquisition, satisfaction, and retention at the centre of the CRM
adoption process.
The general consensus from the management viewpoint is that organisational and
communication issues are the most important elements in the emerging strategic
business process associated with the adoption of CRM. Moreover, the adoption of
CRM rests on the proper understanding on the part of both employees and
management, including project management. Four main themes related to the
management discipline are concluded from the interviews results: strategic planning,
internal marketing, organisation culture and leadership, and project management.
In the realm of IT, the findings of the interviews point to two main themes in the
conceptual framework: innovation characteristics and knowledge management
capabilities. First, the innovation characteristics are features that explain system use
behaviour, referring to the idea that employees must use CRM to achieve a companys
goals. The results confirm prior research suggesting that the TAM is a useful model
for predicting and explaining employees behaviour in adopting CRM. This model is
composed of two constructs: perceived usefulness and ease of use, which respondents
confirmed as important determinants of their attitudes towards CRM. Second, the
results demonstrate that knowledge management capabilities are essential for
establishing an organisations ability to benefit from CRM initiatives. Organisations
need to capture, manage, and share customer knowledge so that employees can make
sense of CRM.
The results of the qualitative study will be used to develop scale items of constructs in
the conceptual model, as shown in Figure 4.1. The detailed stages of developing the
research model and scale items will be discussed in the next chapter.
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Chapter 5: Research Model and Scale Development
5.1 Introduction
Following on from the qualitative study, this chapter sets out to discuss the stages of
developing the research model and scale items in this study. The results of the
qualitative study were the main input into generating research models for further
investigation. The detailed procedures for developing the research model and scale
items will be elucidated in this chapter, including the procedures followed in order to
produce and develop the research questionnaire.
5.2 Stages of Developing the Research Model
A widely used methodology of scale development procedure in marketing research,
developed by Churchill (1979), includes eight consecutive steps to develop scale
items including specification of domain, generation of items, collecting data,
purifying measures, collecting data, assessing reliability and validity, and developing
norms. Churchills (1979) paradigm for developing a research instrument and its
measures has provided the basis for constructing this research instrument and its
measures. In addition, the author of this study has developed updates and
improvements to Churchills (1979) work, and sketched the research stages in
accordance with this research context. The following flow chart (Figure 5.1) shows
the stages of developing the research model, which is followed by a brief description
of each stage.
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Figure 5.1: Stages of Developing the Research Model


5.2.1 Reviewing the Literature
In order to investigate CRM adoption within organisations, a review of innovation
adoption literature was conducted. Accordingly, this study adapts Ko et al.s (2008)
model to focus on a multi-stage hierarchal process of CRM adoption investigating
employees perception of CRM, and its implementation within an organisation. Since
this research aims to develop a holistic conceptualisation of the major factors
affecting organisations adoption of CRM system, a multidisciplinary approach was
advocated. The review of the literature, in Chapter two, demonstrates that the concept
of CRM is a joint development between marketing, management and IT disciplines.
Marketing scholars view CRM as a concept that adds value to the customer; they are
primarily concerned with the essentials of customer-centric and relationship




Reviewing Literature
Developing Research Framework
Conducting In-depth Interviews
Building the Model
Defining Variables

Developing scale items
Conducting Pilot Test

Translating Instrument

Collecting Data
Analysing Data: EFA
Analysing Data: CFA
Analysing Data: SEM
D
e
v
e
l
o
p
i
n
g

i
n
s
t
r
u
m
e
n
t

A
n
a
l
y
s
i
n
g

D
a
t
a

Confirmatory study
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marketing as an effective business strategy, given that customer-centric orientation
places the customers knowledge, interaction, acquisition, value, satisfaction, and
retention at the centre of the value creation process. Management researchers focus on
organisational and communication issues surrounding the development and
implementation of the business strategy, and the role of personnel in managing the
adoption of the CRM. Overall, researchers from this area suggest that an
organisations strategic plan, internal marketing, organisation culture and leadership,
as well as project management, have a strong influence on the organisations
successful adoption of CRM. IT researchers often focus on knowledge management
initiatives, CRM usage and implementation factors (Wu and Wu, 2005). Furthermore,
they indicate that system use has a strong effect on employees adoption of CRM in
organisations, referring to the idea that employees must use the CRM system to
achieve their marketing goals. A number of studies have successfully adopted and
extended the technology acceptance model (TAM) to examine the acceptance of new
technologies in the CRM domain.
5.2.2 Developing the Research Framework
The multi-disciplinary review of the literature generated a number of constructs
considered as influencing CRM adoption. The relationship between these constructs
are conceptualised based on previous research, as outlined in the literature chapter.
Consequently, a conceptual research framework was proposed based on incorporating
key success factors that include the organisations customer-centric orientation,
strategic plan, internal marketing, organisation culture and leadership, project
management, and innovation essentials.
5.2.3 In-depth Individual Interviews
The individual interviews aimed to explore the subjective perceptions and experiences
of a variety of marketing managers, CIOs, and employees working with CRM. The
developed conceptual framework from the CRM and CRM adoption literature was
used as the basis of the interview design. Nine in-depth interviews with managers and
employees at two different organisations in Jordan were conducted to achieve the
required objectives. Participants in the study had more than two years experience in
managing or using CRM systems and the participation was voluntary.
5.2.4 Building the Model
Based on prior related research and interviews conducted in the preliminary
investigation, a model of the adoption factors of CRM was constructed. The in-depth
interviews were used to ensure that the researcher took into considerations the main
factors that might affect organisations adoption of CRM in the research context.

Once theories have been posited, research hypotheses should be established. There are
two forms of hypotheses, a) null and b) research. According to Kaplan (2004),
researchers use of the null hypothesis and Null Hypothesis Significant Testing
(NHST) is criticised. The main criticisms are there are both overrated, and often cause
133

confusion. This is why he argues that researchers should go beyond the null ritual. For
this reason, the author of this study simply opted to avoid or ignore the null
hypothesis. However, it is important to consider that although no null hypothesis was
used in this study, the potential for the statistical tools used (i.e. chi-square, p-value)
should guide the careful and sensitive appreciation of the research findings.

The conceptual framework was based on a number of constructs which as
unobservable (latent) variables could not be measured directly, but could be measured
by variables identified as indicators. By reviewing extant research in the same
context, the researcher identified relevant indicators that could be used to measure
constructs.
5.2.5 Developing the Instrument
The process of developing the research instrument (questionnaire) in this study can be
divided into four stages: i) defining variables, ii) developing scale items, iii)
translating the instrument, and iv) conducting a pilot test. This research instrument
used three types of questions: nominal scale, seven-point likert scale, and open-ended
questions. The final version of the questionnaire is presented in the Appendix. After
providing respondents with a general and simple definition of CRM system, the
instrument was designed to include a four-part questionnaire. The first part, related to
the CRM in the organisation, was used to collect basic information about the CRM
system used and its implementation status (measured by 14 scale items). The second
part related to the organisations adoption of CRM. This part of the questionnaire was
used to collect information regarding employee perceptions of the benefits of CRM
benefits (measured by 9 scale items), and the sub-factors affecting CRM adoption
(measured by 85 items). The third part related to organisational characteristics
including industry, number of employees, turnover, ownership type, operation, and
speed of response to changes in the external environment. The fourth part investigated
the respondents characteristics including gender, age, education level, job role, work
experience, and use of technology.
I. Defining Variables
This research incorporated eight factors in the conceptual framework including:
strategic planning, customer-centric orientation, culture and leadership, internal
marketing, project management, knowledge management capability, innovation
factors, and adoption. Each factor was introduced and re-examined in the literature
review chapter. A brief definition of each factor is presented as following:
Adoption: the acceptance and continued use of a product, service, or idea (Sathye,
1999).
Strategic planning: a process of developing and implementing a course of
action or direction that an enterprise should take to achieve its objectives. (Cory,
1988:5).
134

Customer-centric orientation: a resourced and organised strategy which aims to
segment, interact, satisfy, and build long term relationship with the customers
(Wang and Qualls, 2007).
Culture and leadership: the dynamic process of constructing and managing
organisational culture which involves the people element in the essence of
leadership (Schein, 2004).
Internal marketing: any form of marketing that focuses on changing employees
attention to the internal activities, in order to successfully implement marketing
plans (Ballantyne et al., 2000).
Project management: a framework of practical professional capability to deliver
a project in a set time frame, meeting a given mission by organising a dedicated
project team, and effectively combining the most appropriate technical and
managerial methods (Gentle, 2002).
Knowledge management: the process of capturing, managing and transmitting
knowledge through the organisation and across the organisational boundary (Von
Krogh et al., 2000)
Innovation factors: individual (employees) beliefs of CRM uses; this study
looks specifically at two major beliefs, namely perceived usefulness and perceived
ease of use, which were suggested by Davis (1986) in his TAM model.
The in-depth interview results together with the factors found in the literature helped
the researcher to generate twenty three sub-factors under each factor in the conceptual
framework, as depicted in Table 5.1. These twenty four sub-factors are identified as
the unobserved/latent variables of the study.








135

Table 5.1: A List of Observed Variables (indicators) for Each Unobserved (Latent variables)
Factors Indicators
Adoption AD1: Perception towards CRM
AD2: Adoption
AD3: Implementation
Strategic
Planning

SP1: Clear direction and objectives that embrace CRM strategy.
SP2: Covering CRM activities in the performance measurement system
SP3: Development and integration of a strategic set of activities
Customer-
centric
orientation

CS1: Customers profitability
CS2: Segmentation
CS3: Acquisition
CS4: Customers satisfaction
CS5: Retention
Culture and
leadership
CL1: Resistant to change
CL2: Supportive organisational culture (team working and a cross-functional)
CL3: Leadership
Internal
marketing
IM1: Analyse and redesign organisations process (Change management)
IM2: Communication
IM3: Reward CRM usage
Project
management
PM1: Project Management Techniques
PM2: Change control
Innovation IN1:Ease of use
IN2:Usefulness
Knowledge
management
KM1: Capture
KM2:Manage
KM3:Transmit
II. Developing Scale Items
Following the exploratory phase, the construction and validation of the research
instrument was commenced. According to Churchill (1979), there are a number of
techniques for developing scale items in marketing research, including literature
searches, experience surveys, critical incident analysis, and interviews. Moore and
Benbasat (1991) contend that applying these techniques can facilitate the production
of scale items with a relatively high degree of content validity. In this study, the
literature review and in-depth interviews were used to identify the final set of
observed variables (indicators) for each unobserved (latent variables). This would aid
transforming academic theories in such a way as to help practitioners think about their
related issues with CRM adoption. Consequently, the questionnaire was designed to
include scales to measure all of the previously outlined (see Table 5.1) sub-factors as
related to each factor in the conceptual model.
A number of instruments have been published for the purpose of empirically
investigating factors affecting CRM adoption. However, relatively few of these
studies have investigated the subject from varying contexts and disciplines, including
marketing, management and IT discipline. Hence, a number of published instruments
from separate studies across varying disciplines were consulted to generate scale
136

items for the sub-factors presented in Table 5.1. Existing scale items were combined
and modified to create scale items for all of the sub-factors. In addition, all sub-factors
were measured by using a seven-point likert scale (1- Strongly Disagree and 7-
Strongly Agree). The following will demonstrate the questions measuring sub-
factors within each relevant factor: adoption, strategic planning, customer-centric
orientation, culture and leadership, internal marketing, project management,
knowledge management capability, and innovation factors.
Adoption
In this study, three sub-factors were used to identify the CRM adoption status. Firstly
the perception of CRM benefits (AD1- Perception) was measured by nine items, as
shown in Table 5.2, based on Ko et al. (2008) and Sophonthummapharn (2008).
Second was the adoption of CRM (AD2); although Ko et al. (2008) measured this
sub-factor by asking the respondents to answer yes or no to indicate whether the
organisation was using the CRM system, this study did not explicitly include a
measure question in the questionnaire. This is due to the fact known by the researcher
that all of the organisations participating in this study were already using the CRM
system. Thirdly, the implementation sub-factor (AD3- Implementation) was measured
by fourteen items adapted from Ko et al. (2008).
Table 5.2: Adoption Scale Items
Sub-Factors Scale Items
AD1: Perception
(Ko et al., 2008;
Sophonthummapharn,
2008)
Gain competitive advantage.
Analyse customer requirements more efficiently.
Identify new selling opportunities.
Increase customer satisfaction.
Increase customer loyalty.
Increase customer retention rate.
Increase revenue and profitability.
Increase employee productivity.
Enhance customer relationships.
AD3:
Implementation
Ko et al. (2008)
Developing customer database
Personal customisation through customer database analysis
Developing products through customer involvement
Offering customer loyalty programs
Offering real-time customer services
Managing customer loyalty
Managing customer complaints
Developing member-only site in your organisations website
Categorising/segmenting customers based on spending (lifetime value(
Customising services depending on customers categories/segments
Providing customer with information via email
Developing sales promotion strategy
Providing products and services in one place
Automating cross-sell and up-sell capability
137

Strategic Planning
The following table (Table 5.3) shows three sub-factors within the strategic planning
context including clear direction and objectives embracing CRM strategy (SP1),
Covering CRM activities in the performance measurement system (SP2), and
development and integration of a strategic set of activities (SP3). SP1 construct was
measured by seven items based on a Meadows and Dibb (2008), Chang et al. (2010),
and Rapp et al. (2010). SP2 had six scale items based on Stefanou et al. (2003),
Meadows and Dibb (2008), and Trainor et al. (2011). Finally, SP3 had three items
based on Salomann et al. (2005), Raman et al. (2006), Meadows and Dibb (2008), and
Richard (2008). Each sub-factor was measured by a seven-point scale for each
question as shown in the following table.
Table 5.3: Scale Items for the Strategic Planning Sub-factors
Sub-Factors Scale Items
SP1 (Meadows
and Dibb, 2008;
Chang et al.,
2010; Rapp et
al., 2010).
Our organisation has clear business vision and direction.
Our organisation has clear business goals related to customer
acquisition, development, retention and reactivation.
The majority of our employees are aware of the organisations
vision.
Our approach to customers is an important part of the
organisational vision.
In our organisation, CRM is an important strategic issue.
There is a set of clear priorities for CRM projects.
These CRM projects are consistent with our organisations
vision and statements.
SP2 Stefanou et
al. (2003);
Meadows and
Dibb (2008);
Trainor et al.
(2011)

We regularly measure the effectiveness and the success of CRM
activities.
Our approach to CRM is reflected in our performance measures
used throughout our organisation.
Acquiring customer knowledge (understanding customer and
analysing customer information) is a key performance measure
used throughout our organisation.
Promoting effective communication channels with customers is
a key performance measure used throughout our organisation.
Customer loyalty is a key performance measure used throughout
our organisation.
Customer value (customer equity and customer lifetime value)
is a key performance measure used throughout our organisation.
SP3 (Salomann
et al., 2005;
Raman et al.,
2006; Meadows
and Dibb, 2008;
Richard; 2008)

There is a top-down planning process for linking CRM strategy
to business needs.
All of our business functions (e.g. marketing/sales,
manufacturing, research and development) are integrated in
serving the needs of our target markets.
Our organisation allocated multi-functional teams that work on
plans to achieve CRM objectives.
138

Customer-Centric Orientation
The customer-centric orientation factor included five sub-factors: customers
profitability (CS1), segmentation (CS2), acquisition (CS3), customers satisfaction
(CS4), and customers retention (CS5). Each sub-factor was measured by a seven-
point scale for each question as shown in the following table (Table 5.4).
Table 5.4: Scale Items for the Strategic Planning Sub-factors
Sub-Factors
Scale Items
CS1
(Reinartz et al.,
2004; Khan, 2008;
Wu and Wu, 2005;
Law, 2009)
We continuously track customers information in order to
assess customers lifetime value.
We use information technology to help us determine which of
our current customers are of the highest value.
Our organisation systematically attempts to manage the
expectations of high value customers.
CS2
(Reinartz et al.,
2004; Khan, 2008;
Wu and Wu, 2005;
Law, 2009)
We use customer information to segment markets.
We segment customers based on their lifetime value (e.g.,
high, moderate, and low).
We are structured to optimally respond to groups of customers
with different needs.
CS3
(Reinartz et al.,
2004; Khan, 2008;
Wu and Wu, 2005;
Meadows and
Dibb, 2008; Law,
2009)
We made appropriate attempts to attract prospects.
We have a continuous process in place for getting feedback to
improve the acquisition process.
We differentiate our acquisition investments based on
customer lifetime value.
We have technologies that allow for one-to-one
communications with potential customers
CS4
(Richard, 2008;
Rapp et al., 2010)
Our organisation strategy is driven by customer satisfaction.
We frequently and systematically measure customer
satisfaction.
Our organisation responds quickly to negative customer
satisfaction wherever it may occur in the organisation.
CS5
(Reinartz et al.,
2004; Meadows
and Dibb, 2008;
Law 2009)
In our organisation sustaining relationship with customers is
more important than customers acquisition.
We actively stress customer loyalty or retention programmes.
We have systematic training procedures for helping employees
deal differently with high- and-low value customers.



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Culture and Leadership
The questions measuring the culture and leadership factors are presented in the
following table (Table 5.5). There were three sub-factors: resistance to change (CL1),
supportive organisational culture (team working and a cross-functional) (CL2), and
leadership (CL3). Each sub-factor was measured by a seven-point scale for each
question as shown in the following table.
Table 5.5: Scale Items for the Culture and Leadership Sub-Factors
Sub-Factors
Scale Items
CL1
(Law, 2009; Rapp
et al., 2010)
The top management has full confidence in implementing
change.
The introduction of CRM raised a conflict of interest among
different functional units.
We have had very few problems fitting CRM within our
organisation culture.
CL2
(Chen et al.,
2009b; Keramati et
al., 2009)
Our organisation emphasises the need for innovation for
development.
People in this organisation stress quick response to changing
market conditions.
In general, our organisational culture has a flexibility to accept
change readily.
Our organisational structure facilitates cross-functional
cooperation and collaboration.
CL3
(Law ,2009;
Meadows and
Dibb, 2009; Rapp
et al., 2010)
Top management provides full support to practicing CRM, in
order to keep good relationship with customers.
In order to change for the better, senior management believes
that good customer relationship is a necessity.
Top management constantly monitors our level of commitment
and orientation to serving customers needs.
Our top management formally promotes and encourages cross-
functional teamwork.
CRM has a strong champion at the top of our organisation.

Internal Marketing
The questions measuring the internal marketing are presented in the following table
(Table 5.6). There were three sub-factors: analyse and redesign organisations process
(Change management) (IM1), communication (IM2), and reward CRM usage (IM3).
Each sub-factor was measured by a seven-point scale for each question as shown in
the following table.



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Table 5.6: Scale Items for the Internal Marketing Sub-Factors
Sub-Factors
Scale Items
IM1
(Avlonitis and
Panagopoulos,
2005; Karakostas
et al., 2005; Law,
2009)

Our organisation tries to help employees understand what is
happening in the organisation.
Our organisation gives employees opportunities to be involved
in the decision-making process.
Our organisation tries to help employees understand the
dynamics of the market situation (competitors pressure,
customer satisfaction, and the new marketing approach which
makes use of information technology).
The training that was provided by our organisation has helped
me to understand management's expectations regarding CRM.
IM2

(Law ,2009;
Meadows and
Dibb ,2009;
Pedron ,2009)
Effective communication channels often support the
implementation of CRM.
Staff training emphasises internal communication and
cooperation across departments to build customer relationships.
Our organisation encourages the communication between
different levels and functional units.
The development of communication systems (e.g. email, fax,
mobile SMS, website, and social media) helps our organisation
communicate better across different departments and with
customers.
Communication in our organisation helps the employees to
know the details of the CRM programme and the problems
which may occur during the execution.
IM3

(Plakoyiannaki,
2005; Pedron,
2009)
Our organisations policy rewards the use of CRM.
In our organisation, employees who use CRM to provide
excellent customer service are rewarded for their efforts.
Our performance measurement and rewards systems encourage
employees to work with CRM system.

Project Management
The questions measuring the project management factor are presented in the following
table (Table 5.7). There were three sub-factors: project management techniques
(PM1) and change control (PM2). Each sub-factor was measured by a seven-point
scale for each question as shown in the following table.





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Table 5.7: Scale Items for the Project Management Sub-Factors
Sub-Factors Scale Items
PM1
(Reinartz et al.,
2004;
Rapp et al.,2010;
Trainor et al.,2011)
Our organisation is content with how our CRM project
priorities are set.
In our organisation, there are appropriate project schedules,
plans and clear strategy for CRM implementation.
It is difficult to train users on how to use the CRM system.
PM2
(Gefen and
Ridings, 2002;
Wilson et al., 2002;
Richard, 2008;
Mckay, 2009)
Our information technology (IT) function constantly monitors
the performance of CRM functions.
In our organisation, users ideas are given due attention in the
CRM planning and implementation process.
Our IT function often meets changes in CRM requirements by
users or due to business environment change.
Our IT function has the ability to adjust CRM project plans on
an ad hoc basis.

Innovation
The questions measuring innovation sub-factors are presented in the following table
(Table 5.8). There were two sub-factors: ease of use (IN1), and usefulness (IN2). Each
sub-factor was measured by a seven-point scale for each question as shown in the
following table.
Table 5.8: Scale Items for the Innovation Sub-Factors
Sub-Factors Scale Items
IN1 (Davis, 1989;
Richard, 2008;
Baker, 2009;
Ramdani et al.,
2009)
My interaction with CRM is clear and understandable.
Our CRM system is easy to use.
It is easy to get our CRM to do what I want it to do.
IN2 (Davis, 1989;
Wu and Wu, 2005;
Richard, 2008)
Our CRM enhances my effectiveness in my job.
Our CRM is useful to my job.
Implementing CRM increases the profitability of our
organisation.

Knowledge Management
The questions measuring the knowledge management factor are presented in the
following table (Table 5.9). There were three sub-factors: capture (KM1), manage
(KM2), and transmit (KM3). These sub-factors were developed from the knowledge
management process explained in the literature chapter. Each sub-factor was
measured by a seven-point scale for each question as shown in the following table.

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Table 5.9: Scale Items for the Knowledge Management Sub-Factors
Sub-Factors Scale Items
KM1
(Jayachandran,
2004; Reinartz et
al., 2004; Sin et al.,
2005; Abdullateef
et al., 2010; Hung
et al., 2010)
Our organisation invests in technology to capture and acquire
real time customer information and feedback.
We use customer information to develop customer profiles.
Our organisation maintains a comprehensive database of our
customers.
KM2
(Croteau & Li
2003;
Hung et al., 2010)
Our organisation is able to provide fast customer response
because of integrated customer knowledge across several
functional areas.
Our organisation is able to provide fast decision-making due to
customer knowledge availability and precision.
Our organisation can provide authentic customer information
for quick and accurate customer interaction.
Our organisation can generally predict future customers'
expectations.
KM3
(Richard , 2008;
Law, 2009; Pedron,
2009)
Individual customer information is available at every point of
contact.
Information on customers is disseminated throughout the
organisation.
In our organisation customer information is redirected to the
right people.
III. Translating the Instrument and Conducting a Pilot Test
This study was conducted in Jordan, and since Arabic is the main language spoken
there, the empirical study was conducted in the Arabic language. The researcher had
translated the questionnaire from English language into Arabic. The first draft of the
Arabic questionnaire was reviewed by Muneer Abbad (Assistant Professor in Jordan),
who is fluent in both languages, used to translating questionnaires from English to
Arabic, and possessing in-depth knowledge of the subject area. After preparing the
final version of the questionnaire, it was piloted with three participants employed at a
hotel in Jordan. This was to ensure that the questions in the questionnaire worked as
required with the kind of participants involved, especially given that the instrument
was translated and delivered into a different language (Oppenheim, 1992). Based on
the participants feedback some questions were reworded, in order to deliver a more
specific and clear meaning.
5.2.6 Collecting Data
Initially, relevant participants were accessed through personal contacts developed in
Jordan, the researcher being resident there and through publicly available information
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in the trade press. Therefore, each organisations executive level and potential
participants were asked to read and approve the participant information sheet before
conducting a self-administered questionnaire which was distributed to motivate
respondents, and give the chance to clarify doubts and increase the response rate. In
order to assure participants of their anonymity, a covering letter was sent to tackle this
issue and the questionnaire did not ask the participants to provide any individual
information. The participants were asked to return the filled questionnaires to the
researcher, who did not know the participants but who was present when the
participants filled in the questionnaires.
The survey of this study started with providing a definition of CRM, and then asked
the participants to fill out four sections. The first section gave brief information about
CRM in the organisation, and asked for the participants perception towards it. The
second section included questions asking for a description of the organisations
implementation of CRM strategies. The third section was designed to measure the
variables tested in this study. Finally, the fourth section included questions regarding
the demographics of participants. The English version of the survey is available in
Appendix 1.
5.2.7 Analysing Data
After completing the prior stage of the research, the main statistical techniques used in
the analysis were:
1. Exploratory Factor Analysis (EFA) used as the initial step in identifying the
latent factors in the questionnaires.
2. Confirmatory Factor Analysis (CFA) applied to the hypothesised
measurement models.
3. Structural Equation Modelling (SEM) applied to the structural model to
evaluate any relationships between factors that could lead to a better
understanding of organisations adoption of CRM.
4. Analysis of Variances (ANOVA) utilised to determine demographic
differences (gender, education, age, work experience, technology
experience, and CRM experience) of the factors of the study.
5.2.8 Confirmatory Study
Statistical tools such as confirmatory factor analysis (as implemented by SEM tools)
and the SEM are repeatedly employed by researchers to measure the validity and
reliability of research instrument measures (Martnez-Lpez et al., 2012). These
statistical tools are generally useful for confirmatory investigations which aim to test
existing theoretical models. Nevertheless, since the nature of this study, particularly
the overall aim of the research, was to develop a new model, it was not envisaged as a
confirmatory investigation study. The confirmatory study in this research was
conducted mainly to test the research model. Since this research conceptual model
was developed initially using an exploratory study, its generalisability could then be
established with a confirmatory study which also employed qualitative methods. In
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particular, a confirmatory study employing interviews with stakeholders dealing with
CRM would aid evaluating whether the empirically investigated conceptual model did
cover the main factors affecting organisations adoption of CRM.
5.3 Summary
In this chapter, the stages used to develop the research model and scale items in this
study were examined. The combination of interview results and reviewed literature
led to the design of a survey instrument used in this study. The data then will be
analysed using a variety of appropriate statistical techniques, such as exploratory
factor analysis (EFA) and Structural Equation Modelling (SEM). The data analysis
and findings of the collected data will be represented in the following chapter.

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Chapter 6: Data Analysis and Findings

6.1 Introduction
Having outlined the research philosophy adopted to develop and test the conceptual
framework of this study, this chapter presents the results of the quantitative research
and tests hypotheses developed in Chapter four. To recap, the main research question
of this study is to investigate factors which lead organisations to adopt CRM. In this
chapter, factors affecting CRM adoption are analysed amongst organisations across
four industries in Jordan.
Following the introduction, the characteristics of the sample are discussed. This is
followed by a section discussing different statistical techniques which could be used
to serve the research question. The fourth section describes the analysis strategy used
in this study. Exploratory Factor Analysis (EFA) is first used to summarise the scale
items, then the two-stage structural model is presented to evaluate the proposed
model. The first stage of the measurement model employs Confirmatory Factor
Analysis (CFA) to confirm or reject the proposed model. Reliability and validity of
items in the measurement model were examined during the CFA stage. The second
stage involves using SEM on structural models to evaluate the hypothesised
relationships that predict CRM adoption. Finally, the impact of organisation
characteristics differences of factors affecting CRM adoption are examined using
ANOVA techniques.
6.2 Characteristics of the Sample
6.2.1 The Characteristics of Organisations
In this section, a descriptive analysis of the sample is provided, starting with the
outline of the general characteristics of organisations involved in this study, including
firm size, age, turnover and industry. This descriptive analysis of the sample aims to
present a brief description of the ten organisations participating in this study. The
number of organisations in Jordan covered by this study totalled ten, across four
industries (banking and finance, telecommunication, hospitality, and automotive).
This description of the sample is useful in order to examine whether the collected
information is representative in this study.
The data were collected via personally administered questionnaires between June and
November 2011. Of the 400 questionnaires distributed, 322 were returned giving a
response rate of 80%. After screening and reviewing the questionnaires, 21 responses
were found to be invalid due to a large number of missing variables, thus excluded
from the study. This left a total number of 301 fully completed responses that were
valid for final analysis, that is, for a valid response rate of 75%. This response rate is
on a par with previous social science studies which deems the quality of data
acceptable. To ensure the response rate, the author personally contacted the key
146

personnel (senior managers) in a number of organisations to negotiate access in order
to collect questionnaires from their staff. Upon agreement from the key personnel and
before an appointment was set, the author explained her criteria for selecting
respondents, and a list of names was provided to the author of those who were
working with CRM and who would be interested in participating in this study. The
descriptive statistics of the responding organisations are shown in Table 6.1.
Table 6.1: Organisations Characteristics Information (n=301)
Variable No of respondents Percent (%)
Industry
Banking and Finance 99 32.8
Telecommunication 83 27.4
Hotel 81 26.9
Automotive 38 12.6
Number of employees
25 or less 7 2.3
26-50 8 2.7
51-100 12 4.0
101-155 3 1.0
151-200 13 4.3
More than 201 258 85.7
Turnover
Less than 25m 86 28.6
26m-50m 52 17.3
51m-100m 33 11.0
101m-155m 6 2.0
151m-200m 19 6.3
More than 201m 86 28.6
Ownership type
Sole proprietorship 20 6.6
Partnership 128 42.5
Joint venture 117 38.9
Subsidiary 10 3.3
Associate company 2 .7
Corporation 6 2.0
Other 18 6.0
Operation of the organization
Regional 108 35.9
International 193 64.1
Speed of response to change
Slow 11 3.7
Fair 120 39.9
Fast 170 56.5
As can be seen from Table 6.1, the sample included ten organisations from different
industries. Most of the organisations were in the banking and finance industry (32%),
telecommunication (27%) and hotels (26%). There were also some participants from
147

the automotive industry (12%). In short, the sample was biased towards banking and
finance, telecommunication and hotels industries, which represented 87 % of the total,
with fewer representatives from the automotive industry.
Results indicate that the majority of the organisations had more than 200 employees,
which makes this study biased to organisations with more than 200 employees.
Variance in firm size by turnover can be seen in Table 6.1. This shows that 33% of the
organisations had a high turnover (over 201 million dinars) and 28% of the
organisations had a considerably lower turnover (less than 25 million dinars). For the
portion of business ownership type, a little less than half (42%) of the organisations
were owned by partnership and a considerable number of the organisations (38%)
were owned by joint ventures. A large number of organisations operate internationally
(64%) and a considerable number of organisations operate regionally (35%). More
than half of the respondents (56%) stated that their organisations have a fast response
to changes to the external environment. Other organisations were classified to have a
fair (39%) or slow (3%) response to changes.
6.2.2 Demographics of the Respondents
Demography of the 301 sample respondents are explained here. This section consists
of questions relating to demographic and basic information of the participants in the
survey. They are classified into different key features: age, gender, education level,
job role, work experience, technology experience and CRM experience. A summary
of the demographic data is shown in Table 6.2.


















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Table 6.2: Respondents Demographic Information (n=301)
Variable No of respondents Percent %
Gender
Male 201 66.8
Female 100 33.2
Age
Less than 20 years 4 1.3
20-30 years 183 60.8
30-40 years 95 31.6
More than 40 years 19 6.3
Education level
High school 7 2.3
Vocational/ Diploma 28 9.3
Bachelor 217 72.1
Master 40 13.3
Doctorate 4 1.3
Other 5 1.7
Job role
Top management 28 9.3
Middle management 86 28.6
Operational management 82 27.2
Employee 105 34.9
Work experience
Less than 1 year 11 3.7
1-2 years 39 13
2-3 years 65 21.6
3-5 years 56 18.6
5-7 years 50 16.6
7 years or above 80 26.6
Technology experience
1-2 years 29 9.6
2-3 years 50 16.6
3-5 years 59 19.6
5-7 years 42 14
7 years and above 121 40.2
CRM experience
Less than 1 year 66 21.9
1-2 years 89 29.6
2-3 years 61 20.3
3-5 years 45 15
5-7 years 20 20
7 years and above 20 6.6
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The results from the sample show that 66.8% and 32.2% of respondents were male
and female, respectively. The majority of respondents were between 20 and 30 years
old (60.8%), and mostly tertiary educated as 72.1% had a bachelor degree.
Participants were classified as employees (34.9%), operational management (27.2%),
middle management (28.6%) and top management (9.3%). Having this variety of
stakeholders serves the research purpose of developing a comprehensive
understanding of the success factors associated with CRM. As for other demographic
data (see Table 6.2), it was found that 85% of participants had more than 2 years of
work experience, and 40.2% of participants had more than 7 years of technology
experience. Reviewing the participants experience with CRM, it seems that
participants had different level of experience, as shown in Table 6.2.
6.3 Statistical Techniques
There are three types which make up the field of statistics: descriptive, inferential and
relational statistics (Schumacker and Lomax, 1996). Firstly, descriptive statistics
provide the analyst with a means to present a summary and description of the sample
main features (Hair et al., 2006). Descriptive statistics are concerned with two types:
measures of central tendency (mean) and measures of dispersion (standard deviation
and variance). Their purposes are to describe the basic statistical features of the data,
and look at their normality.
Secondly, inferential statistics are derived from the application of inductive reasoning
which moves from specific facts to general but provisional conclusion. Inferential
statistics allow researchers to reason tentative conclusions they wish to draw from the
population sample (Cooper and Schindler, 2003). According to Zikmund (2003),
inferential statistics provide researchers with a means to draw inferences and make
judgment about the sample. Researchers use this type of statistics to draw inference
about the sample (Diamantopoulos and Schlegelmilch, 2000). Inferential statistics are
mainly used to answer cause-and-effect questions and investigate differences among
groups. Cooper and Schindler (2003) summarise the variety of tests to choose from
for the inferential statistic: chi-square test, Pearsons correlation coefficient, post-hoc
test, one-way analysis of variance, and t-test. There are two main types of inferential
statistics: estimation of population values (non-parametric) and testing statistical
hypotheses (parametric) (Steinberg, 2008; Tullis and Albert, 2008). Non-parametric
tests, such as chi-square test, are applied to nominal data which are described as data
that have no order. Alternatively, parametric tests, such as t-test and ANOVA, are
applied to data which have a certain value attached to each item (eg: likert-scale
responses).
In this research both types of inferential statistics are used. Firstly, the Confirmatory
Factor Analysis (CFA) used in this research produces tentative conclusions about the
research sample (chi-square test of significance and Pearsons correlation coefficient).
Secondly, the t-test and ANOVA analyses used in this research examine difference
between varied groups within the sample.
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Finally, relational statistics fall into three categories: univariate, bivariat and
multivariate analysis (Babbie, 2007). Univariate analysis is the study of a single
variable and its attributes of the applicable unit of analysis. Bivariate analysis is
testing a relationship or causality between two variables. On the other hand,
multivariate analysis involves observation and analysis between more than three or
more variables at a time (Babbie, 2007). Using this technique, relationships and
statistical dependences between these variables are taken into account. This
consideration of statistical dependence distinguishes multivariate analysis from
corresponding univariate. Exploratory Factor Analysis (EFA) and structure equation
modelling (SEM) are techniques of multivariate analysis used in this research.
Multivariate analysis techniques are common in the social sciences as it enables the
analysis of large datasets using complex models (Babbie, 2007). According to Sharma
(1996:5), multivariate statistics are methods for data sets with more than one
independent and/or more than one dependant variable. Additionally, they examine
differences in observations with respect to two or more variables simultaneously.
Multiple regressions, multiple correlations and variances and covariance analysis are
among the most used multivariate analysis.
If the numbers of variables increase, the chance of multivariate relationships between
variables will increase. Factor analysis is concerned with analysing interrelationships
among a large number of variables by explaining these variables in terms of their
common underlying dimensions (factors) (Hair et al., 2006). Both exploratory and
confirmatory factor analyses are special forms of factor analysis. Choosing the right
form of factor analysis should be based on the purpose of the research (Hair et al.,
2006). EFA is mainly used to explore data in order to determine the number or the
nature of factors when the researcher does not have prior sufficient evidence to form
hypotheses about the number of factors underlying the data (Conway and Huffcut,
2003). Hence, EFA is frequently used for theory-generating as opposed to theory-
testing using CFA (Stevens, 1996). On the other hand, CFA is used to test
prespecified relationships, and to determine the ability of a predetermined factor
model to fit an observed set of data.
6.4 Data Analysis Strategy
To address the research problem, two statistical analysis softwares were employed in
this study: the Statistical Package for the Social Sciences (SPSS) version 19 and
AMOS 19: Structural Equation Modelling (SEM). SPSS is used to perform an
Exploratory Factor Analysis (EFA) and provide descriptive analysis of the sample
such means and standard deviations. Figure 6.1 shows the main steps and statistical
techniques used in the analysis. In the next section, the first step EFA is explained in
more details.


151

Figure 6.1: The Main Steps and Techniques Used in the Quantitative Data
Analysis














As can be seen from Figure 6.1, Exploratory Factor Analysis (EFA) was first
undertaken to identify construct validity of the scales as suggested in the conceptual
model. EFA also helps to understand the structure of factors affecting CRM adoption
by exploring if the items can be grouped under the factors proposed in the conceptual
model.

After EFA analysis, Confirmatory Factor Analysis (CFA) using SEM was used to test
the measurement model. SEM was employed using the two-step model-building
approach recommended by Anderson and Gerbing (1988): the assessment of the
measurement model and assessment of the structural model. Firstly, the measurement
model aimed to develop the underlying measures by specifying the relationships
among observed (measured) variables underlying the unobserved (latent) variables. In
the measurement model step, the entire set of items was subjected to CFA in order to
verify and examine the underlying constructs, as well as to provide evidence of
dimensionality, scale reliability and validity. In investigating reliability, the internal
consistency of multi-item scales, used in this study, was assessed using Cronbachs
alpha and CFA. The measurement models also provided an assessment of convergent
and discriminant validity (or construct validity) (Churchill, 1979). Once the scale had
been developed to have adequate measurement properties, the proposed structural
model was revised and assessed using SEM.

Following SEM the research hypotheses were tested in step two (the assessment of the
structural model). Finally, a series of Analysis of Variances (ANOVA) were
conducted to determine some general characteristics of the respondent companies
differences as to the factors of the study.


Reliability of Measures
Testing the Research Model
Validity of Measures 1: EFA
Validity of Measures 2: CFA
Testing Group Difference:
ANOVA
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6.5 Exploratory Factor Analysis
Factor analysis is a series of procedures which attempts to identify and explain the
correlations among variables and to exploring dimension of the scales. Using factor
analysis, the relationship among a large set of variables is examined and the
underlying structure of factors is examined based on correlation between observed
variables. Factor analysis is also used to identify smaller sets of salient variables from
a larger set to be used in subsequent multivariate analysis with minimum loss of
information (Malhotra, 2007).
The main types of factor analysis are Exploratory Factor Analysis (EFA) and
Confirmatory Factor Analysis (CFA). According to Hair et al. (2006:162), EFA is a
highly useful and powerful multivariate statistical technique for effectively extracting
information from large bodies of interrelated data. In EFA approaches, researchers
seek ultimately to find a model which fits the data and has theoretical support. In this
study, EFA was used as an initial step to find out whether the underlying factors of the
items were those suggested in the conceptual model and whether new items in the
survey were grouped to the same extent as proposed. In the EFA analysis, there were
generally five main steps: defining the objective of EFA, designing EFA, determining
the assumptions of EFA, estimating EFA, and interpreting EFA.
a) Defining the Objective
The primary objectives of EFA, which are data summarisation or data reduction,
should be identified as the first step. The difference between the objective of data
summarisation and data reduction depends upon the ultimate research question. In
summarising the data, the ultimate research question is to better understand the
interrelationships among the variables. Summarising data is concerned with
investigating the underling correrational pattern shared by the variables to develop
theoretical models. It provides the researcher with a clear understanding of the
underlying variables or factors, and allows the researcher to represent the data with a
fewer but representative number of variables. Hence, factor loadings representing the
correlation coefficient between variables (rows) and factors (columns) are all that is
required for the data summarisation analysis. While data reduction simplifies data
structure by revealing a smaller number of underlying factors, it helps to reduce the
data to fewer variables, which represent the underlying factors, by deriving an
empirical value or factor score for each factor and then substituting this value for the
original values.
In this research, the data summarisation was considered to be the main objective of
EFA in order to determine the interrelationships among variables in the proposed
model. The use of EFA as a data summarisation technique would serve the study as
large number of variables could cause the study to become rather complicated.
Moreover, some of the variables might have had more than one aspect, each of which
would need to be distinguished and analysed carefully because one variable might
correlate with an independent or dependant variable whereas another may not
153

(Monette et al., 2008). For situations such as these, EFA was used as a first step to
summarise and group the number of variables uses in the proposed model. EFA
attempts to group intercorrelated variables into more general underlying variables.
Thus, EFA offers not only the ability of gaining a clear view of the data but also the
possibility of using the output in succeeding analysis (Field, 2000). Subsequently,
CFA is used to confirm or reject the possibility that the indicators would sort
themselves into corresponding factors in the proposed models.
b) Designing EFA
When designing EFA the correlations matrix between the variables must be
calculated. Additionally, the design of the study in terms of the type and number of
variables, and the sample size should be carefully considered. In this study, SPSS 19
was used to generate the correlations matrix among variables. Furthermore, emphasis
was placed on metric variables (interval data), and the number of observed variables
(3-7) were integrated to measure unobserved variables (factors) in the proposed
model.
c) Determining EFA Assumptions
The next step in EFA analysis process is determining the assumptions of EFA
analysis. According to Hair et al. (2006), the critical assumptions underlying EFA are
conceptual more than statistical. Since statistical techniques have no means of
determining appropriateness of EFA other than correlations among variables, it is the
researchers responsibility to ensure that observed patterns are conceptually valid and
appropriate to study with EFA. Conceptual assumptions predict variables and the
strengths of associations between them are based on theoretical justifications. In this
study, the list of variables and their relationships were developed to reflect the
conceptual assumptions adopted by the researcher, as discussed in Chapter four.

From a statistical point of view, since the objective of EFA is to identify interrelated
sets of variables, the multiconllinearity degree is one of the main statistical
assumptions. Multicollinearity exists when a strong correlations is detected between
two or more variables in the analysis (Hair et al., 2006). Before performing EFA, the
suitability of data for factor analysis should be assessed first. The correlation matrix
should be examined to detect the presence of any substantial number of correlations
greater than 0.3, in order for factor analysis to be appropriate (Tabachnick and Fidell,
2001). On the other hand, partial correlations analysis can objectively reflect the
correlation among variables. A partial correlation coefficient measures the
correlations between two variables without the influence of other variables. Factor
correlations should be small (less than .7) to indicate that factor analysis is
appropriate, and variables can be explained by the variable loading on the factor.
Partial correlation coefficients can be determined using the anti-image correlations in
the SPSS, which contain the negatives of partial correlations coefficient.

154

The Bartletts test of Sphericity is another method of determining the appropriateness
of factor, in that it examines the entire correlation matrix. A statistically significant
Bartletts test of Sphericity suggests that the correlations matrix has significant
correlations among at least some of the variables. Bartletts test is a chi-square test
used to examine the hypothesis that the variables are uncorrelated in the populations.
A large value of chi-square test and small value of significant (p<0), should favour the
rejection of the null hypothesis. In turn, this would indicate that the variables are
correlated among themselves and factor analysis is appropriate.

d) Estimating EFA
The next step involves determining the number of factors to include in the final
model. There are two main methods for extracting factors to represent the structure of
variables in the analysis: common factors analysis and component factor analysis.
The decision on which method to use depends on the objective of the factor analysis
with some knowledge about the relationships between variables (Hair et al., 2006).
While common factor analysis is concerned with identifying the underlying factors
which reflect what the variables share in common, component factor analysis or
principal component analysis (PCA) is interested in summarising the original
variables to a smaller set of independent variables which best represent the
interrelations among variables.
In this study, PCA was performed to ascertain the underlying structure of data. The
PCA analysis was essential at this stage as it served analyse the structure of the
correlations among variables based on a common set of underlying dimensions. The
total variance in the data was used to determine the minimum number of factors
affecting CRM adoption which would account for maximum variance of data.
Deciding the number of factors to extract or retain was one of the most important
decisions after factor extraction. Optimally, the researcher would retain a small set of
variables and still adequately represent the entire set of variables. According to Hair et
al. (2006), there are no current statistical techniques that provide researchers with the
most accurate methods to determine the number of factors to retain. However, some
stopping criteria are currently utilised to help researchers decide on the number of
factors to retain. The numbers of factors, in this study, were empirically identified
using a combination of eigenvalues criteria and Scree plot test. Following Kaiser
Criteria led to components with eigenvalues (latent root criterion) of greater than one
being retained. The Scree test criterion plots the eigenvalues of the factors against the
number of factors in their order of extraction. The result is an L-shaped graph used to
evaluate the cut-off point. The number of factors retained using Scree test criteria is
based on the point at which the curve first begins to flatten out (Tabachnick and
Fidell, 2001).


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e) Interpreting EFA
To assist the process of factor interpretation, there are three fundamental processes: i)
estimate the factor matrix, ii) factor rotations, and iii) factor interpretation and
respecification. In the first step, to estimate the factor matrix, the initial unrotated
factor structure matrix is computed, containing the factor loadings for each variable
on each factor. Factor loadings are the weights and correlations between each variable
and the factor. Factor loadings allow an interpretation of the role of each variable in
defining each factor.
The next step, factor rotation, involves employing a rotation method to simplify the
factor structure. Rotation of factors often improves the interpretation of data by
reducing some of the ambiguities accompanying unrotated factor solutions. Varimax
is the most popular rotation method by far (Hair et al., 2006). The objective of
varimax method is to derive a factor structure in which each factor has a small number
of large loadings and a large number of small loadings. This simplifies the
interpretation because each given variable should have a high loading on one factor
and each factor represents only a small number of variables.
Finally, the researcher seeks to determine the factor loadings for each variable in
order to assess the variables role and contribution in determining the factor structure.
During this evaluation process the researcher may need to respecify the factor model
due to: i) the deletion of variables from the analysis, ii) specifying different rotation
methods, iii) the need to extract a different number of factors, or the researcher may
desire to change the extraction method. In this study, the researcher needed to
respecify the factor model owing to the deletion of some factors from the analysis.
Respecification of a factor model is accomplished by beginning the process of
interpretation once again (Hair et al., 2010).
6.5.1 Findings of the Exploratory Factor Analysis (EFA): Factors affecting
CRM adoption
Factor analysis is used to explore data whose underlying structure is unknown.
However, a basic assumption of factor analysis is that the observed patterns are
conceptually valid and appropriate to study with factor analysis (Hair et al., 2010).
This is mainly because the factor analysis technique has no means of determining the
appropriateness of data other than the correlation among variables.
Sample size and the correlations of the data are important consideration in planning
factor analysis studies (Sekaran, 2003). In addition, sample size has always been a
major issue in using SEM and factor analysis because small samples increase the
chance of yields with unreliable results. The traditional rule suggests estimating the
sample size, based on the number of variables in the research. The total number of
variables in this study was 23 (21 adoption factors and 2 adoption variables). Hair et
al. (2010) recommend 15-20 cases per variable for generalisability purposes.
However, some studies recommend 5-10 cases per each item to be factored up to a
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total of 300 (Kass and Tinsley, 1979). As a general rule of thumb for determining
sample size, 300 cases are deemed to represent a good sample size for factor analysis
(Tabuchinck and Fidell, 2001). Moreover, Anderson and Gerbing (1988) suggest a
minimum sample size of 200. In this study, the sample used for factor analysis was
301 cases. Therefore, the sample size was deemed comfortable.
Further analysis of determining the appropriateness of factor analysis examines the
entire correlation matrix. Bartletts Test of Sphericity is a statistical test for the
presence of correlations among variables, and gives one overall measure. It provides a
statistical probability that determine whether the variables are uncorrelated in the
population. A large value of 2 favours the rejection of the null hypothesis which
assumes that all of the observed variables being analysed are uncorrelated with each
other (Malhotra, 2007). In other words, it examines whether the population correlation
matrix has significant correlations among at least some of the variables. With respect
to the Bartletts test, very small values (p<0.05) indicate a high probability of
significant relationships between variables, while higher values indicate that the data
will not be appropriate for factor analysis. Researchers often reject the null hypothesis
and prove its improbability when the p-value is less than 0.05 (Kaplan, 2004). In this
study, the results of Bartletts test applied to the factors affecting CRM adoption, were
significant with
2
= 10279.6 and p<0.05 (see Table 6.3). Thus, the null hypothesis
was rejected and factor analysis was deemed an appropriate method for data analysis
in this study.
Table 6.3: KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .927
Bartlett's Test of Sphericity Approx. Chi-Square 10279.647
Df 1485
Sig. .000

The Kaiser-Meyer-Olkin (KMO) measure is another sampling adequacy test for factor
analysis. This measure calculates the squared correlation among variables to the
squared partial correlation among variables. The KMO value ranges from 0 to 1, a
value of 0 indicating that factor analysis would not be appropriate and a value of 1
indicating that the factor analysis would be potentially valid. Tabachnick and Fiddle
(2001) recommend a KMO= 0.6 to be the main acceptable value. In this study, the
KMO was used to check for partial correlations among factors with a value of 0.927
(Table 6.3) which is close to 1: so, this suggests the existence of correlations among
variables was small and factor analysis would be an appropriate method for data
analysis.

In addition, the SPSS software package provides the anti-image correlation matrix
which is a matrix of negative partial correlations among variables. The anti-image
correlation matrix is shown in appendix 5.4. The diagonal holds the values of the
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KMO measure of sampling adequacy for each variable, while the off-diagonal values
are the negative partial correlations among variables. The majority of these
correlations are very small, while the diagonal correlations are all more than 0.5.
Therefore, based on anti-image matrix the factor analysis was found to be an
appropriate technique for reducing and summarising the number of items in this study.

In this study, factors affecting CRM adoption were proposed (Figure 6.2). Overall,
twenty one factors were proposed as factors that might affect organisations adoption
of CRM. EFA was used as the first step of the analysis in order to examine whether
the underlying factors of items were those suggested in the conceptual model.
Furthermore, this study incorporated a large number of items in the survey and some
of these items were newly developed items. Hence, EFA was considered as a useful
tool to assess whether factors differed from each other, besides exploring whether
items were statistically grouped to the same extent as what had been proposed in the
research conceptual framework. This can be assessed through Principal Component
Analysis (PCA) using VARIMAX rotation.

The condition of selecting a factor is based on Raubenheimers (2004) suggestion,
which is that an item is said to load on a factor if the factor loading is greater than 0.5,
which is higher that the generally accepted level of 0.4. This decision is justified as
items with smaller factor loading fail to load significantly on any factor, which in turn
is likely to reduce its significance (Ramsey, 2005). Using the 0.5 factor loading
criterion, the rotated pattern matrix was examined for items that did not seem to load
on a factor with other items from the same 1-7 scale. Items that cross-loaded on more
than one factor were examined and deleted to produce more interpretable factors.
With exploratory analysis, altogether 25 items with smaller or cross loadings were
deleted, resulting in 55 scale items to measure factors affecting CRM adoption, as
shown in Appendix 5.3. After deleting items with smaller loadings, a respecification
of the factor model was accomplished by running the process of interpretation a
second time. Hence, a subsequent factor analysis was carried out on the 55 items. Use
of principle component analysis (PCA), using varimax rotation, resulted in a twelve
factors model. The results of the PCA for each of the factors are given in Table 6.4.
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Table 6.4: Results from Factor Analysis of Items with Factor Loading > 0.5
Factor No. 1 2 3 4 5 6 7 8 9 10 11 12
1Clear direction and objectives that embrace CRM strategy (CLRD)
Clear business vision and direction. .67
Clear business goals related to customer acquisition, retention and reactivation. .70
The majority of employees are aware of the organisations vision. .56
Our approach to customers is an important part of the organisational vision. .70
2 Covering CRM activities in the performance measurement system (PMS)
There is a set of clear priorities for CRM projects. .67
CRM projects are consistent with the organisations vision and statements. .71
Measuring the effectiveness and the success of CRM activities. .64
CRM is reflected in our performance measures used throughout our organisation. .60
3 Customer segmentation based on profitability analysis (SEGM)
IT determines which of our current customers are of the highest value. .67
Managing the expectations of high value customers. .67
Customer information is used to segment markets. .70
Segmenting customers based on their lifetime value (high, moderate and low). .74
4 Customer satisfaction (CS)
Business strategy is driven by customer satisfaction. .59
Frequently and systematically measure customer satisfaction. .72
Responding quickly to negative customer satisfaction. .72
Sustaining relationship with customers is more important than customers acquisition. .60
5 Change management (CM)
Stressing customer loyalty or retention programmes. .54
Training employees to deal differently with high- and-low value customers. .54
Top management has full confidence in change. .63
The introduction of CRM raised a conflict of interest among different functional units. .72
Fitting CRM within our organisation culture raised very few problems. .58
6 Supportive organisational culture (SUPP_CULT)
Our organisation emphasises the need for innovation for development. .60
People stress quick response to changing market conditions. .66
Organisational culture has a flexibility to accept change readily. .62
7 Internal communication (COMM)
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Factor No. 1 2 3 4 5 6 7 8 9 10 11 12
Staff training emphasises internal communication and cooperation to build customer relationships. .68
Encouraging the communication between different functional units. .63
The development of communication helps our organisation communicate better across different
departments and with customers.
.64
8 Rewarding CRM usage (RCRMU)
The organisations policy rewards the use of CRM. .73
Rewarding employees who use CRM to provide excellent customer service. .84
Rewards systems encourage employees to work with CRM system. .82
9 Change control (CHNGC)
Users ideas are given due attention in the CRM planning and implementation process. .62
Meeting changes in CRM requirements by users or due to business environment change. .58
The ability to adjust CRM project plans on an ad hoc basis. .63
10 Perceived ease of use (PEOU)
Interaction with CRM is clear and understandable. .67
CRM system is easy to use. .77
It is easy to get our CRM to do what I want it to do. .67
We invest in IT to capture real time customer information. .60
11 Customer knowledge management (CKM)
Maintaining a comprehensive database of our customers. .59
Providing fast customer response because of integrated customer knowledge across functional areas. .65
Providing fast decision-making due to customer knowledge availability and precision. .76
Providing customer information for quick and accurate customer interaction. .68
12 Knowledge management: transmit (KMT)
Individual customer information is available at every point of contact. .75
Information on customers is disseminated throughout the organisation. .79
Customer information is redirected to the right people. .60
%variance explained
5.83 4.69 5.95 5.85 6.51 3.86 6.06 6.08 4.74 7.13 6.09 3.97
Eigenvalues
1.42 1.19 1.53 1.48 2.40 1.02 1.61 1.93 1.30 19.51 2.24 1.07
KMO=.927 Bartletts test=1485 (0.000)
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These results show the loadings of individual items that exceeded 0.5 (Raubenheimer,
2004). Items loaded at less than 0.5 would be deleted from the next step of the
analysis as they failed to load significantly on any factor. Although loading of 0.5 or
0.60 were not considered high, they would be kept in order to satisfy Nunnallys
(1978) threshold of acceptable loadings, and because they were are able to fall
reasonably within the parameters of the presumed factor.
Overall, this analysis resulted in a factor model consisting of 12 factors made up of 44
items (observed variables). Some of these factors (6 out of 12) were very close to the
proposed constructs described in theory or in the literature review of the study. These
factors are clear direction, supportive organisational culture, internal communication,
rewarding CRM usage, change control, and transmitting customer knowledge. The
other 6 factors were not identical to the proposed constructs in Chapter four.
However, this was to be expected as the items in this research were newly developed
and integrated into one instrument. Most importantly, the researcher was able to name
those factors after reviewing the literature, as will be discussed in the following sub-
section.
The criterion of eigenvalue greater than 1 and/or Scree plot of eignevalues were used
to determine the optimal number of factors that could be extracted from the data.
Figure 6.2 shows the Scree plot test for all factors affecting CRM adoption.
Figure 6.2: Scree Plot Test for All Factors Affecting CRM Adoption

Eigenvalues (see Table 6.4) and Scree plot test (see Figure 6.2) revealed the same
result, that is that 12 factors could be constructed from the data. The Scree plot
showed that the shape of the curve changed direction and became horizontal at point
12. According to Hair et al. (2010), all factors above the elbow in the plot should be
retained as they are the main factors contributing to the explanation of variance in the
data set.

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6.5.2 Factors Resulting from EFA
Cumulatively, the 12 factors explained 67% of the variance of the quantitative data,
which is deemed sufficient to represent the data (Pet et al., 2003). Expanding on the
information in Table 6.4, twelve complementary yet distinctive factors were found to
affect organisations adoption of CRM.
Factor 1 is titled clear direction and objectives (CLRD). This factor accounted for
5.83% of the total variance and consisted of four items with loading s ranging from
.56 to .70. The items contained in this factor describe the role of a strong and clear
strategy as a perquisite to focus CRM solution on business objectives.
Factor 2 is titled performance measurement system (PMS). This factor accounted for
4.96% of the total variance and consisted of four items with loading s ranging from
.60 to .71. The items contained in this factor describe covering CRM activities in the
performance measurement system.
Factor 3 is titled segmentation analysis (SEGM). The EFA grouped the scale items
of two proposed factors from the conceptual framework: customer segmentation and
customers profitability analysis, into one factor. This factor has support from existing
theories of customers segmentation and profitability. This factor accounted for 5.95%
of the total variance and consisted of four items with loadings ranging from .67 to .74.
The items contained in this factor describe segmentation strategies based on customer
lifetime value and profitability profiles.
Factor 4 is titled customer satisfaction (CS). This factor accounted for 5.85% of the
total variance and consisted of four items with loading s ranging from .59 to .72. The
items contained in this factor describe the extent to which a business strategy is driven
by customer satisfaction. In other words, those items represented the extent to which
firms persistently pursue customer satisfaction.
Factor 5 is titled change management (CM). The EFA grouped scale items from two
proposed factors in the conceptual framework: change management and customers
retention. Existing literature supports this claim which suggests that accepting new
changes is essential for customers retention orientation in an organisation. This factor
accounted for 6.51% of the total variance and consisted of five items with loadings
ranging from .54 to .72. The items contained in this factor describe the role of
organisations alignment of employees behaviour towards CRM and customer
retention strategy.
Factor 6 is titled supportive culture (SUPP_CULT). This factor accounted for 3.86%
of the total variance and consisted of three items with loading s ranging from .60 to
.66. The items contained in this factor describe an organisational culture that supports
the innovation adoption process. More precisely, supportive culture entails quick
response to changes and flexibility to accept changes readily.
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Factor 7 is titled internal communication (COMM). This factor accounted for 6.06
of the total variance and consisted of three items with loadings ranging from .63 to
.68. The items contained in this factor describe the role of communication and
interaction within organisations, which support a cross-functional integration between
people from different department across an organisation.
Factor 8 is titled Rewarding CRM usage (RCRMU). This factor accounted for 6.08
of the total variance and consisted of three items with loadings ranging from .73 to
.84. The items contained in this factor describe the alignment of rewards and
measures to shape the behaviour of employees towards CRM.
Factor 9 is titled change control (CHNGC). This factor accounted for 4.74% of the
total variance and consisted of three items with loading s ranging from .58 to .63. The
items contained in this factor indicate that the project management team needs to
monitor and control CRM implementation, in order to ensure flexibility and
adjustments to unexpected changes.
Factor 10 is titled perceived ease of use (PEOU). This factor accounted for 7.13% of
the total variance and consisted of four items with loadings ranging from .60 to .77.
The items contained in this factor describe the issue of technology ease of use. In
short, it explains the user expectations of using CRM as being effort-free.
Factor 11 is titled customer knowledge management (CKM). The EFA grouped the
two proposed knowledge management capabilities: capture and manage from the
conceptual framework into one factor. A review of the literature shows that this result
has a theoretical underpinning as some prior studies measures all knowledge
management capabilities as a one factor. This factor accounted for 6.09% of the total
variance and consisted of four items with loadings ranging from .59 to .76. The items
contained in this factor describe the capabilities of knowledge management to acquire
and manage customer information.
Factor 12 is titled transmitting customer knowledge (KMT). This factor accounted
for 3.97% of the total variance and consisted of three items with loading s ranging
from .60 to .79. The items contained in this factor describe knowledge dissemination
within an organisation throughout all customer channels where it can be reused most
effectively.
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Figure 6.3: Proposed Model Resulting from EFA


As a result, twelve factors in Model 2 were extracted with an indication that these
factors differed from each other. The twelve factors are shown in Figure 6.3 and will
be used for further analysis. In the light of the EFA, the hypotheses of the study were
modified to accommodate the underlying structure of identified factors, as shown in
Table 6.5. Such use of EFA to modify and generate hypotheses is justified by Conway
and Huffcutt (2003) who evaluated EFA practices in organisational settings and
suggested that EFA can be integrally involved in the development and testing of
hypotheses. This argument is further strengthened by Costello and Osborne (2005)
who reviewed EFA best practices and recommended that EFA should be employed as
an error-prone procedure during initial stages of a research for explicating theory and
generating testable hypotheses. The following Table depicts the modified final
research hypotheses with reference to EFA results.



CLRD
PMS
CS
SEGM
CM
SUPP_CULT
COMM
RCRMU
CHNGC
PEOU
CKM
KMT
Perception Implementation
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Table 6.5: Proposed Hypotheses Resulting from EFA
No. Hypothesis
H1 Employees perceptions of CRM benefits mediate the effect of adoption
factors on an organisation's implementation of CRM.
H2 Having a direction and objectives that embrace a clear CRM strategy will
have a positive effect on employee perceptions of CRM.
H3 Strategically covering CRM activities in the performance measurement
system will have a positive effect on employee perceptions of CRM.
H4 Organisations emphasis on traditional segmentation will have a positive
effect on employee perceptions of CRM.
H5 Organisations emphasis on satisfaction will have a positive effect on
employee perceptions of CRM.
H6 Change management in an organisation will have a positive effect on
employee perceptions of CRM.
H7 Rewarding CRM usage will have a positive effect on employee perceptions
of CRM.
H8 Internal communication in an organisation will have a positive effect on
employee perceptions of CRM.
H9 Supportive culture in an organisation will have a positive effect on employee
perceptions of CRM.
H10 Managing changes in CRM projects will have a positive effect on employee
perceptions of CRM.
H11 Perceived ease of use of CRM system will have a positive effect on
employee perceptions of CRM.
H12 Managing customer knowledge will have a positive effect on employee
perceptions of CRM.
H13 Transmitting customer knowledge will have a positive effect on employee
perceptions of CRM.

EFA was performed before arriving at final items and scales in order to provide
preliminary evidence on the unidimensionality of the factors in the initial model
depicted in Figure 4.1 (21 factors and 22 hypotheses). The EFA led to a 12 factor
model (see Figure 6.3). In other words, the EFA results suggested that there was a
high correlation between some proposed factors. On the other hand, several items
failed to load significantly on a factor. The refinement and modification of
hypothesised factor structure necessitated the modification of the research hypotheses
(22 hypotheses before EFA); The EFA led to a modification of the structure of the
conceptual framework and hence the research hypotheses. The number of hypotheses
retained after EFA was 13 hypotheses, as shown in Table 6.5. This was a result of
discharging 9 factors from further analysis.
Lee and Hooley (2005) have cautioned marketing scholars from naive and sometimes
over reliance on EFA. They stated that it is part of scholars remit to analyse the link
between theoretical foundations and analysis techniques involved in their studies.
They further explain that EFA is an effective approach of developing scale items
when not viewed as a rigorous rule, but instead as a starting point for more thoughtful
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analysis. Building from this, a deeper examination of the links between the EFA
results, theoretical foundations, and techniques used in this study was conducted. A
careful examination of EFA results showed that there was a significant overlap
between the individual items contained in each factor. This can be mainly explained
by the prevailing theoretical overlap between the main disciplines and factors in the
initial conceptual model. For example, EFA revealed the scale items of both of
segmentation and profitability analysis factors as interrelated. As such it could be
argued that they should be used to measure one factor rather than two. In the
marketing literature, segmentation is a concept which is highly interrelated with
customer profitability analysis. In conclusion, the restructure of the factors reflects the
existing overlap between them in the conceptual framework. Hence, the number of
factors in the conceptual model was reduced from 21 to 12.
6.6 Confirmatory Factor Analysis (CFA)
By using EFA, the underlying structure of the large set of variables in this study was
explored. In this section, Confirmatory Factor Analysis (CFA) within the structured
equation modelling (SEM) approach was used to assist in the confirmation and
validation of the unidimensionality of factors extracted from EFA analysis. In other
words, CFA refers to the procedure of testing the hypotheses of the links between
observed variable and their underlying indicators.
The ultimate goal of this study seeks to develop a model that is both substantively
meaningful and statistically well-fitting the data and prior theories. Holmes-Smith
(2006:15) suggests that the researcher should guard against making changes solely
based on data-driven grounds in an attempt to get a model that fits the data better.
Consequently, the evaluation of the hypothesised measurement model is not only
based on statistical principals but also on theoretical underpinnings (Anderson and
Gerbing, 1988; Hair et al., 2006). Hence, if the measurement model of this study is
not consistent with priori specified measurement models, then it should be respecified
and reanalysed. The measurement model is also evaluated using four criteria as
suggested by Bollen (1998): each latent variable has at least two indicators: the
factors are correlated, each indicator is linked to one latent variable, and measurement
errors are uncorrected.
6.6.1 Goodness-of-fit Measures
The issue of how the model which best represents the data reflects underlying theory,
is known as model fit. Goodness-of-fit measures are a series of indices which identify
whether the model fits the data or not. In this study, corresponding observed variables
are loaded on the proposed factors when conducting the CFA, in order to find out
whether the goodness-of-fit measures are acceptable. SEM, using AMOS 19, provides
several indices of goodness-of-fit but there is neither agreement among scholars as to
which indices should be reported nor as to the cut-offs of various indices. Most
scholars recommend evaluating the models by reporting more than one of these
indicators (Bentler and Wu, 2002; Hair et al., 2006). Kline (1998) suggests that
166

researchers need to report at least four indices, such as chi-square, GFI, NFI, or CFI,
NNFI and SRMR to assess how well the specified model accounts for data. Hair et al.
(2006) propose the use of at least three indices, one from each of the categories of
model fit: absolute, incremental and parsimonious.
Table 6.6: Recommended Goodness-of-fit Measures


This study adopts the most commonly used measures in the marketing area, which
reflect the three categories. As shown in Table 6.6, the first category of absolute
values includes chi-square (
2
), GFI and RMSEA; the incremental category includes
CFI; and the parsimonious includes NC (
2
to degree-of-freedom). In this study, all of
these indices were used to measure the proposed model fit.
a) Absolute Fit Indices
Absolute fit indices directly assess how well the proposed theory fits the sample data
and demonstrate which proposed model has the most superior fit (McDonald and Ho,
2002). The chi-square is a commonly used measure of overall fit (Bollen, 1989). It
tests whether the sample variance and covariance matrix (S) are significantly different
to the model implied variance and covariance matrix (). In other word, it calculates
the difference between the probability that the difference between the model and the
observed data is due to chance. If the probability (P) is greater than .05
(predetermined significance level), the model is rejected. Although this type of
statistical index is most commonly used to evaluate the model fit, it has been
criticised for being too sensitive to large samples, usually above 200 (Bagozzi and Yi,
1988; Jreskog and Srbom, 1996). Thus, it is rarely used solely to accept or reject a
model. In fact, marketing researchers substantiate the value of chi-square with other
model fit indices (Bove and Johnson, 2006 as cited in Shammout, 2007).
The second measure of the absolute fit indices, used in this study, is the Goodness-of-
Fit index (GFI). This measure was created by Jreskog and Srbom (1981) to
calculate the proportion of variance and covariance together explained by the model
(Tabachnick and Fidell, 2001). The GFI shows how closely the model comes to
replicate the observed covariance matrix (Diamantopoulos and Siguaw, 2000). Its
value ranges from 0 (indicating poor fit) to 1 (indicating a perfect fit), where a
recommended cut-off point is 0.9 (Miles and Shevlin, 1998; Hair et al., 2006). A large
sample pushes this index up (Bollen, 1990). Researchers should be aware that this
Category Model Goodness-Fit Indexes Recommended
Value
Absolute Chi-square
Goodness-of-fit index (GFI) 0.90
Root mean square error of approximation (RMSEA) 0.08
Incremental Comparative fit index (CFI) 0.90
Parsimonious NC or Chi-square/df 3.00
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index is also sensitive to large samples; a large sample pushes this index up (Bollen,
1990). According to Sharma et al. (2005), the GFI index has become less popular in
recent times, hence should not be used by current researchers.
The third used measure of absolute fit indices is the Root Mean Square Error of
Approximation (RMSEA). This measure represents how well the model fits the
populations covariance matrix (Bryne, 1998). It corrects the tendency of chi-square
statistic to reject any specified model with a sufficiently large sample size and
discrepancy per degree of freedom. According to Diamantopoulos and Siguaw
(2000:85) this measure is one of the most informative fit indices due to its
sensitivity to the number of parameters in the model. A value between 0.03 and 0.08
is a commonly acceptable value for this measure (Hair et al., 2006).
b) Incremental Fit Indices
Incremental fit indices are also known as comparative (Miles ad Shevlin, 2007) and
relative fit indices (McDonald and Ho, 2002). This category of indices compares a
proposed model with a null model, where the null model assumes that all observed
variables are uncorrelated. One of the most popular incremental measures is Normed-
Fit index (NFI) which assesses the proportion of how well the model fits to some
alternative null model. A major drawback to this measure is its sensitivity to large
sample size, underestimating fit for samples less than 200 (Hair et al., 2006). In order
to overcome this shortcoming, a Comparative Fit Index (CFI) has been introduced, by
Bentler (1990), which is an improved version of the NFI. It takes into account sample
size to perform well even when the sample size is small (Tabachnick and Fidell,
2001). Recently, this measure has been used widely used among researchers due to its
being one of the measures least affected by sample size (Fan et al., 1999; Hair et al.,
2010). Values for this measure range between 0 and 1 with values greater than 0.9
indicating good fit to the data.
c) Parsimonious Fit Indices
This category of indices evaluates the number of estimated parameters required to
achieve a specific model fit level (Schumaker and Lomax, 1996). The Normed Chi-
square (NC=
2
/df) is the main commonly used parsimonious fit index to evaluate the
goodness of the model (Hair et al., 2006). This measure has the benefit of reducing
the sensitivity of 2 to the sample size. A range of acceptable values for this measure
has been suggested, ranging from less than 2 (Tabachnick and Fidell, 2001), to less
than 3 (Hair et al., 2006). In this study this measure is used in conjunction with the
other measures mentioned earlier, as a basis for evaluating the goodness of the model.
Table 6.6 summarises the recommended minimum values for all the goodness-of-fit
measures that were used in this study.
5.6.2 Evaluation the Fit of the Model
Confirmatory Factor Analysis (CFA) is performed on the proposed initial model,
resulting from the Exploratory Factor Analysis (EFA). As discussed in the previous
168

section, Chi-Square, GFI, RMSEA, CFI, and
2
/df are the measures used in this study
to determine the initial model goodness-of-fit. As shown in Table 6.7, most of these
measures seemed problematic for the initial model. Hence, the initial measurement
model needed to be respecified and tested again in an attempt to provide a fit
measurement model which would be used in the next of structural model. Revisions
of the measurement model were made as discussed in more detail as follows.
An evaluation of the measurement model is obtained by an inspection of the
standardised residuals and modification indices (Hair et al., 2006; Holmes-Smith et
al., 2006). The standardised residual refers to the residual divided by its standard
deviation, where the residual is the difference between observed covariance terms and
estimated covariance terms. On the other hand, modification indices refer to the
calculation of the relationships in the model that are not estimated. These indices
represent the reduction in the overall model chi-square, and hence the improvement in
fit, if the relationship were specified in the model. Modifications on the measurement
model should be made one at a time as a single change might affect other parts of the
solution (Segars, 1997). Residuals greater than 3 can be useful for determining the
source of misfit, whereas large modification indices, greater than the suggested value
of 3.84 (Bagozzi and Yi, 1988; Hair et al., 2006), show that chi-square could be
reduced when the relationship is specified in the model.
Table 6.7: CFA Statistics of Model Fit
Model Goodness-Fit Indexes Recommended
Value
Initial
Model
Revised
Model
Chi-square 4336.850 1397
Degree of freedom 2065 811
Chi-square/df 3.00 3.567 1.742
Goodness-of-fit index (GFI) 0.90 .669 .829
Adjusted goodness-of-fit index (AGFI) 0.80 .666 .791
Comparative fit index (CFI) 0.90 .809 .913
Root mean square error of
approximation (RMSEA)
0.08 .061 .049
Note: N = 301, * p< 0.05
Based on an examination of the goodness-of-fit model variables, modification indices,
and largest standardised residuals, 23 items in this study were deleted from the
original 67 measurement items (see Table 6.8).




169

Table 6.8: Measurement/Observed Variables Left After the Modification Indices
Factors Variables Description
Clear direction
(CLRD)
Clear business goals related to customer acquisition, development, retention and
reactivation.
The majority of the employees are aware of the organisations vision.
Approaching customers as an important part of the organisational vision.
Performance
management
System (PMS)
There is a set of clear priorities for e-CRM projects.
These e-CRM projects are consistent with the organisations vision and statements.
Regularly measuring the effectiveness and the success of e-CRM activities.
Segmentation
(SEGM)
Using customer information to segment markets.
Segmenting customers based on their lifetime value (e.g., high, moderate, and low).
Customer
Satisfaction (CS)
Organisation strategy is driven by customer satisfaction.
Frequently and systematically measuring customer satisfaction.
Responding quickly to negative customer satisfaction wherever it may occur in the
organisation.
Change
management (CM)
Training procedures for helping employees deal differently with high- and-low value
customers.
Top managements full confidence in implementing change.
The introduction of e-CRM raised a conflict of interest among functional units.
Supportive culture
(SUPP_CULT)
Emphasising the need for innovation for development.
People in the organisation stress quick response to changing market conditions.
The organisational culture has a flexibility to accept change readily.
Communication
(COMM)
Staff training emphasises internal communication and cooperation across departments to
build customer relationships.
Communication between different levels and functional units.
The development of communication systems helps to communicate better across
different departments and with customers.
Rewarding CRM
usage (RCRMU)
Organisation policy which rewards the use of e-CRM.
Rewarding employees who use e-CRM to provide excellent customer service.
The reward systems encourage employees to work with e-CRM system.
Change control
(CHNGC)
Giving users ideas due attention in the e-CRM planning and implementation process.
Meeting changes in e-CRM requirements by users or due to business environment
change.
The IT function has the ability to adjust e-CRM project plans on an ad hoc basis.
Perceived Ease of
Use (PEOU)
Users interaction with e-CRM is clear and understandable.
CRM system is easy to use.
It is easy to get the e-CRM to do what users want it to do.
Customer
knowledge
management
(CKM)
Providing fast customer response because of integrated customer knowledge across
several functional areas.
Providing fast decision-making due to customer knowledge availability and precision.
Providing authentic customer information for quick and accurate customer interaction.
Knowledge
Management:
Transmit (KMT)
Individual customer information is available at every point of contact.
Information on customers is disseminated throughout the organisation.
Customer information is redirected to the right people.
Perception Increase customer satisfaction.
Increase customer retention rate.
Increase revenue and profitability.
Enhance customer relationships.
Implementation Offering customer loyalty programs
Managing customer loyalty
Developing member-only site in your organisations website
Categorising/segmenting customers based on spending (lifetime value(
Providing products and services in one place

170

The model was consequently re-evaluated after each item was dropped. Since the
resulting revised model is consistent with the theoretical underpinnings of the study,
the item deletions in this study appeared to be appropriate. Overall, the results of CFA
are very close to the proposed constructs described in the conceptual model and
theory of previous research. Furthermore, Table 6.7 shows that the revised
measurement model provided adequate fit to the data. Most measures such as:
RMSEA, CFI, and
2
/df showed acceptable results. However, the GFI value (0.829)
seemed problematic, as it fell below the recommended vale (0.9). While recognising
the limitation to the measurement model as reported here, the combination of the good
acceptable results from at least one absolute index (RMSEA) and incremental index
(CFI), besides the
2
/df acceptable value, could be argued as providing sufficient
unique information to serve as a satisfactory basis for a revised measurement model
on which to proceed.
6.7 Validity and Reliability of the Measures
After deriving the best-fitting measurement model, a study model and related
instruments can be tested and assessed for validity and reliability (Anderson and
Gerbing, 1988; Hair et al., 2006). Validity and reliability are two separate yet related
concepts (Bollen, 1989). While validity is concerned with the accuracy of measuring
the research instrument measures, reliability is concerned with stability of the
instrument measures (Sekaran, 2003). In other words, an instrument is valid if it
succeeds in measuring what it was supposed to measure and reliable if it is consistent
and stable. Given that validity and reliability tests were used to ensure the quality of
the findings and conclusions of this study, both validity and reliability are discussed
below. The two types of commonly used validity and reliability tests for
measurement scales include convergent validity and discriminate validity tests, which
are employed in this study.
Convergent validity assesses the extent to which two measures of the same construct
are correlated. A set of indicators presumed to measure the same construct (concept)
show convergent validity if their correlations are at least moderate in magnitude.
Therefore, indicators with high loadings on the same factor indicate that the scale is
measuring its intended construct (Kline, 1998; Hair et al., 2006). According to Fronell
and Larcker (1981), there are three dimensions to be considered when assessing
convergent validity test: item reliability (measuring standardised factor loading),
construct (composite) reliability and average variance extracted (AVE).
Firstly, item reliability refers to the degree of variance explained by the construct
rather than by error. It is also known as squared correlations (R
2
) which represents the
correlation coefficients between the indicator and the latent variable (construct). R
2

can be obtained by squaring the standardised factor loading provided by AMOS. It is
suggested that R
2
greater than 0.50 provide evidence of acceptable reliability, and an
item value less than 0.50 can be only acceptable if it provides a theoretical meaning
(Lu et al., 2007). Secondly, construct reliability is measured by determining the extent
171

to which the measurement of the set of indicators of a construct is consistent (Holmes-
Smith et al., 2006). For the measurement model, a value of higher than 0.70 is
considered evidence of constructs validity. The construct reliability is similar to
Cronbachs alpha, a measure of a reflective constructs construct reliability, yet it
includes the actual factor loading, whereas Cronbachs alpha uses equal weighting.
Finally, the average variance extracted estimate (AVE) is a more conservative
measure of the shared variance in a set of measures than construct reliability. It is the
average squared factor loading for items loading on a construct and is a summary
indicator of convergence. According to Fornell and Lacker (1981), the AVE should be
equal or greater than 0.50 to suggest adequate convergence and hence considered
acceptable. These two measures must be calculated for each construct as AMOS does
not provide these two measures directly (Hair et al., 2006). The three measures of
convergent validity test are shown in Table 6.9.



















172

Table 6.9: Convergent Validity test results
Factor Variables Standardised
Loading
(>.7)
Reliability
(R
2
) (>.5)
Error
Variance
(1- R
2
)
AVE
(>.5)
Composite
Reliability
(>.7)
Cronbachs
Alpha(>.7)
CLRD CLRD1
CLRD2
CLRD3
.71
.70
.77
.51
.49
.59
.48
.50
.40
.53

.77 .77
PMS PMS1
PMS2
PMS3
.85
.87
.74
.73
.76
.55
.26
.23
.44
.68

.86 .86
SEGM SEGM1
SEGM2
.84
.71
.71
.51
.28
.48
.63 .75 .75
CS CS1
CS2
CS3
.74
.74
.69
.55
.55
.48
.44
.44
.52
.52 .77 .76
CM CM1
CM2
CM3
.76
.85
.75
.58
.73
.57
.41
.26
.42
.62 .83 .83

SUPP SUPP1
SUPP2
SUPP3
.74
.83
.78
.55
.69
.61
.44
.30
.38
.62 .83 .82
COMM COMM1
COMM2
COMM3
.76
.76
.76
.58
.58
.57
.41
.41
.42
.58 .80 .80

RCRMU RCRMU1
RCRMU2
RCRMU3
.73
.87
.82
.54
.75
.67
.45
.24
.32
.65 .85 .85
CHNGC CHNGC1
CHNGC2
CHNGC3
.73
.80
.70
.53
.65
.49
.46
.34
.50
.56 .79 .79
PEOU PEOU1
PEOU2
PEOU3
.79
.87
.80
.63
.77
.64
.36
.22
.35
.68 .86 .86
CKM CKM1
CKM2
CKM3
.79
.77
.72
.63
.60
.51
.36
.39
.48
.58 .80 .81
KMT KMT1
KMT2
KMT3
.80
.67
.66
.65
.44
.44
.34
.55
.55
.51

.76 .75
Perception PER1
PER2
PER3
PER4
.69
.74
.75
.78
.48
.55
.56
.62
.52
.45
.44
.38
.55 .83 .83
Implementation IMP1
IMP2
IMP3
IMP4
IMP5
.72
.75
.74
.80
.73
.51
.56
.54
.64
.53
.49
.44
.46
.36
.47
.55 .77 .77

As indicated in Table 6.9, these measures identified values which exceeded the
suggested levels of acceptance (i.e., R
2
, 0.70 for construct reliability, 0.50 for AVE,
and 0.70 for construct reliability). However, some measures values seemed
problematic. In particular some values of item reliability were a little below the 0.50
threshold (.44). While recognising that there are some limitations to the convergent
tests as reported here, the combination of the good results was deemed to be a
satisfactory basis on which to proceed. Hence, all the above results indicate evidence
173

of strong convergent validity for the constructs of the constructs of the measurement
model. Furthermore, these results indicate that the instrument used could be
considered as reliably and internally consistent.

Table 6.10: Factor Correlations Matrix
CLRD PMS SEGM CS CM SIPP COM RCRMU CHNGC PEOU CKM KMT PER IMP
CLRD
1.00
PMS
0.67 1.00
SEGM
0.43 0.45 1.00
CS
0.58 0.49 0.51 1.00
CM
0.67 0.66 0.45 0.46 1.00
SUPP
0.60 0.50 0.54 0.60 0.62 1.00
COMM
0.63 0.64 0.44 0.60 0.62 0.59 1.00
RCRMU
0.44 0.45 0.30 0.30 0.47 0.39 0.43 1.00
CHNGC
0.55 0.50 0.53 0.54 0.51 0.65 0.55 0.51 1.00
PEOU
0.59 0.55 0.52 0.49 0.56 0.58 0.58 0.30 0.64 1.00
CKM
0.59 0.53 0.40 0.58 0.61 0.66 0.61 0.42 0.67 0.55 1.00
KMT
0.52 0.45 0.46 0.45 0.45 0.56 0.48 0.32 0.53 0.56 0.48 1.00
PER
0.66 0.64 0.37 0.61 0.56 0.48 0.61 0.41 0.46 0.46 0.60 0.45 1.00
IMP
0.60 0.53 0.41 0.51 0.45 0.50 0.52 0.49 0.53 0.46 0.46 0.39 0.53 1.00


As for discriminant validity, it demonstrates the extent to which a construct is truly
distinct from other constructs. This test is based on assessing the correlation among
indicators, where a summated scale is correlated with a similar, but distinct construct.
The matrix of factor correlations is useful for this assessment. The correlation should
be low, reporting that the summated scale is sufficiently different from other similar
constructs. According to Kline (2005), an estimated correlation greater than 0.85
indicates that the two factors are highly correlated. As indicated in Table 6.10,
estimated factor correlation coefficients, ranging from 0.29 to 0.65, suggest that the
12 factors identified were correlated yet distinct. On the basis of this, strong evidence
of discriminant validity was found for the measurement model.
Hair et al. (2006) also present another method for assessing discriminant validity of
two or more factors: comparing the AVE for each factor with the squared correlations
estimates. If the AVE for each factor is greater than the interconstruct squared
correlations, discriminate validity is supported. This method is demonstrated in Table
6.11.





174

Table 6.11: AVE and Squared Correlations

AVE CLRD PMS SEGM CS CM SUPP COMM RCRMU CHNGC PEOU CKM KMT PER IMP
CLRD
.53 1.00
PMS
.68
0.45 1.00

SEGM
.63
0.19 0.20 1.00

CS
.52
0.33 0.24 0.26 1.00

CM
.62
0.45 0.43 0.20 0.22 1.00

SUPP
.62
0.36 0.25 0.30 0.36 0.38 1.00

COMM
.58
0.39 0.41 0.19 0.36 0.38 0.35 1.00

RCRMU
.65
0.19 0.20 0.09 0.09 0.22 0.15 0.18 1.00

CHNGC
.56 0.30 0.25 0.28 0.29 0.26 0.43 0.30 0.26 1.00
PEOU
.68
0.35 0.30 0.27 0.24 0.31 0.33 0.33 0.09 0.41 1.00

CKM
.58
0.34 0.28 0.16 0.33 0.37 0.44 0.37 0.18 0.45 0.30 1.00

KMT
.51
0.27 0.20 0.21 0.20 0.20 0.31 0.23 0.10 0.28 0.31 0.23
1.00
PER
.55 0.43 0.40 0.13 0.37 0.32 0.23 0.37 0.16 0.22 0.21 0.36 0.20 1.00
IMP
.55 0.36 0.28 0.16 0.26 0.20 0.25 0.27 0.24 0.28 0.21 0.22 0.16 0.28 1.00
Note: AVE must be greater than squared correlation

As indicated in Table 6.11, AVE estimates are greater than the corresponding
interconstruct squared correlations. Therefore, the discriminant validity between
factors in the measurement can be demonstrated.
According to Briggs and Cheek (1986 as cited in Bollen and Lennox, 1991), the inter-
item correlations for a measurement item provide information about whether the item
is unidimensional or not. Correlation coefficients greater than 0.30 for the sample size
of 301 used in the analysis are statistically significant at the 0.01 level (Robinson et
al., 1991). Homogeneity of the scale items is assessed by inspecting the inter-item
correlations, shown in appendix 5.4. The inspection of the inter-item correlation
matrix revealed that all inter-item correlation values all exceeded 0.30 and hence were
significant. The data obtained via the measurement model scale items suggest the
items associated with a particular factor correlated more highly with each other than
with items associated with other factors in the measurement model. Hence, it can be
concluded that the measurement items demonstrated good measures of the factors in
the model.
In summary, the validity and reliability of the measurement scale was established
prior to testing the underlying hypotheses of the research. This is essential as a valid
instrument provides conclusions which aid in generalising the results of the study. For
this purpose, two types of validity and reliability tests are evaluated: convergent and
discriminate tests. The results indicate evidence of strong convergent and discriminant
validity of the measurement. And since all the results of the Confirmatory Factor
Analysis (CFA) demonstrated that the good-model-fit of the measurement model is
acceptable, the revised measurement model (see Figure 6.4) would be incorporated
into the analysis of Structural Equation Modelling (SEM).

175

Figure 6.4: Revised Measurement Model


6.8 Testing of the Research Model: Structural Equation Modelling
(SEM)
Once the measurement model was accepted, the proposed structural model to be
tested was specified by including the constructs in the measurement model. Prior to
performing a path analysis for the structural model which assigned relationships from
one construct to another based on the proposed conceptual model, a preliminary data
analysis was conducted. This included reporting the frequencies, means and standard
deviations each of the factors affecting CRM adoption. Then, a path analysis for the
structural model was performed as a second stage of SEM. The purpose of structural
model was to evaluate the underlying relationships between constructs in the
proposed model in order to answer the research question: what are the factors
affecting CRM adoption within organisations? Finally, a summary of the hypotheses
and support for those hypotheses was prepared for report discussion.
176

6.8.1 Factor Means and Standard Deviations
SPSS version 19 was used to calculate the factors means and standard deviations. The
overall means and standard deviations for the fourteen constructs (including adoption
constructs) in the structural model are presented in Table 6.12.

Table 6.12: Factor Means and Standard Deviations
Factor Mean (M) Standard Deviation (SD)
Perception
5.83 1.10
Customer satisfaction (CS)
5.80 1.15
Communication (COMM)
5.68 1.19
Supportive culture (SUPP)
5.58 1.21
Customer knowledge management (CKM)
5.57 1.15
Clear direction (CLRD)
5.56 1.14
Change control (CHNGC)
5.55 1.15
Perceived ease of use (PEOU)
5.55 1.23
Change management (CM)
5.55 1.26
Knowledge management capabilities: transmit (KMT)
5.55 1.28
Segmentation (SEGM)
5.52 1.28
Rewarding CRM usage (RCRMU)
5.47 1.35
Performance management system (PMS)
5.39 1.23
Implementation
5.35 1.39
The factor means ranged from 5.35 to 5.83 indicating somewhat agree level.
Employee perceptions of CRM had the highest agreement level (Mean=5.83). On the
other hand, the implementation of CRM strategies had the lowest agreement level
(Mean=5.35).
6.8.2 Analysis of Structural Model
SEM is a comprehensive statistical technique which tests hypotheses about direct or
indirect relationships among dependent and independent variables. As mentioned
earlier, this study adopted the two-stage approach to conducting the analysis using
SEM techniques; measurement model and structural model. CFA provides evidence
of the measurement model validity based on the goodness-of-fit measure and
quantitative measures of constructs reliability and validity (convergent and
discriminant validity tests). However, CFA is limited in its ability to evaluate
relationships between constructs in the hypothesised model. Hence, a structural model
was formed from a measurement model by adding estimated path of relationships
among constructs. The structural model was tested and presented as the second and
main stage of the data analysis. According to Hair et al. (2010: 608), the structural
model is a set of one or more dependence relationships liking the hypothesised
models constructs.
177

The model fit measures for the structural model should be similar to those obtained
from the CFA model. The major advantage of SEM is the ability to incorporate error
in measurement into the structural model. In the study a path analysis for the
structural model was conducted to evaluate the underlying hypotheses of this study
that predicts factors affecting CRM adoption. Building upon the revised measurement
model, these hypotheses were represented in thirteen causal paths which propose that
the twelve adoption factors would have a positive effect on organisations
implementation of CRM via a positive mediating effect of employee perceptions of
CRM benefits. Thus, as shown in Figure 6.5, the hypothesised model (full mediation
model) proposed effects of CRM adoption factors on organisations implementation
of CRM are fully mediated by employee perceptions of CRM benefits. In order to
examine the mediating impact of employee perception on organisations
implementation of CRM, this study adopted an alternative competing model (partial
mediation model), as discussed later.
Prior to evaluating the model fit, the loading estimates in the two competing structural
models (see Table 6.13) were examined to find out whether they had changed
substantially from the CFA model. This will provide further support for the models
validity by assessing the constructs stability among the measured items (Hair et al.,
2006).

178

Table 6.13: Loading Estimates for CFA and SEM
Factor

Variables
(Scale item)
CFA standardised
loading
Full mediation
model
Difference Partial
mediation
model
Difference
CLRD CLRD1
CLRD2
CLRD3
.71
.70
.77
.72
.69
.76
.01
.01
.01
.71
.70
.77
.00
.00
.00
PMS PMS1
PMS2
PMS3
.85
.87
.74
.85
.87
.74
.00
.00
.00
.85
.87
.74
.00
.00
.00
SEGM SEGM1
SEGM2
.84
.71
.84
.71
.00
.00
.84
.71
.00
.00
CS CS1
CS2
CS3
.74
.74
.69
.74
.74
.69
.00
.00
.00
.74
.74
.69
.00
.00
.00
CM CM1
CM2
CM3
.76
.85
.75
.76
.85
.75
.00
.00
.00
.76
.85
.75
.00
.00
.00
SUPP SUPP1
SUPP2
SUPP3
.74
.83
.78
.78
.83
.75
.04
.00
.03
.74
.83
.78
.00
.00
.00
COMM COMM1
COMM2
COMM3
.76
.76
.76
.76
.76
.76
.00
.00
.00
.76
.76
.76
.00
.00
.00
RCRMU RCRMU1
RCRMU2
RCRMU3
.73
.87
.82
.73
.86
.82
.00
.01
.00
.73
.87
.82
.00
.00
.00
CHNGC CHNGC1
CHNGC2
CHNGC3
.73
.80
.70
.73
.81
.70
.00
.01
.00
.73
.80
.70
.00
.00
.00
PEOU PEOU1
PEOU2
PEOU3
.79
.87
.80
.79
.88
.80
.00
.01
.00
.79
.87
.80
.00
.00
.00
CKM CKM1
CKM2
CKM3
.79
.77
.72
.79
.78
.72
.00
.01
.00
.79
.77
.72
.00
.00
.00
KMT KMT1
KMT2
KMT3
.80
.67
.66
.80
.67
.66
.00
.00
.00
.80
.67
.66
.00
.00
.00
PER PER1
PER2
PER3
PER4
.69
.74
.75
.78
.69
.73
.74
.77
.00
.01
.01
.01
.69
.74
.75
.78
.00
.00
.00
.00
IMP IMP1
IMP2
IMP3
IMP4
IMP5
.72
.75
.74
.80
.73
.73
.76
.74
.80
.73
.01
.01
.00
.00
.00
.72
.75
.74
.80
.73
.00
.00
.00
.00
.00

179

Examining the loading estimates revealed that they were virtually unchanged from the
CFA, maximum change being 0.04. This indicates acceptable parameter stability
among the measured items and the lack of interpretational confounding issues, which
further supports the models validity.
Full Mediation Model (Hypothesised Model)
The hypothesised model (full mediation model), as depicted in Figure 6.5, positions
employee perception of CRM benefits between the twelve CRM adoption factors and
organisations implementation of CRM. The effects of CRM adoption factors on
organisations implementation of CRM are fully mediated by employee perception of
CRM benefits. After running SEM, goodness-of-fit tests were examined in order to
determine whether the model should be accepted or rejected. The common tests were
summarised earlier in this chapter. A model is said to fit the observed data if the
common goodness of fit tests including Chi-square/df, GFI, CFI and RMSEA are in
the acceptable ranges. In this study, these indices were integrated into the structural
model as disaggregated. The meanings of these indices were explained earlier in this
chapter.
180

Figure 6.5: Full Mediation Model (Model 1)

As presented in Figure 6.5, the full mediation model exhibits an acceptable level of fit
to the data (Chi-square/df=1.742, GFI=.824, CFI=.907 and RMSEA=.050). The
relatively low value of GFI (below the recommend value of .9) reflects the large
number of paths in the model. Nevertheless this was not seen a basis for rejecting the
model as the other measures showed acceptable results.
The difference in fit between the hypothesised structural model and the CFA model
(e.g. the
2
increased to 1450 from 1397 resulting in
2
= 53) suggests that model fit
can be improved by estimating other structural paths. Although, several diagnostic
measures are available for researchers to indicate a potential respecification and
improvement of the model and its fit indices, model respecifaction should have a
theoretical and empirical support (Hair et al., 2006). Several diagnostic measures
including standardised residuals, modification indices (MI) and model fit indices were
therefore also examined to assess whether there were potential weaknesses in the
model or some ways to improve it. These diagnostic measures were examined and
modifications were made one a time as a single modification might affect other parts
181

in the model. Subsequently, the standardised residuals and modification indices were
analysed, resulting in potential covariance between CLRD and IMP, RCRMU and
IMP, and CHNGC and IMP (see Figure 6.6).
Figure 6.6: Partial Mediation Model A (Model 2)

Note: Model 2 is a result of using several diagnosis measures on Model 1
Thus, potential causal links were drawn between these three adoption factors and
CRM implementation, as shown in Figure 6.6 with bold lines. Accordingly,
respecification of the model, adding three significant paths have provided a better
model fit to the data (chi-square/df=1.705, GFI=.828, CFI=.913 and RMSEA=.049).
Partial Mediation Model
As mentioned earlier, this study adopted an alternative competing model (partial
mediation model) to examine the direct and indirect effects of the twelve adoption
factors on organisations implementation of CRM, as depicted in Figure 6.7
182

Figure 6.7: Partial Mediation Model B (Model 3)

As for the full mediation model, the diagnostic measures were used as a clue for
suggesting any model respecification by removing non-significant paths to possibly
provide a better model fit to the data. However, no significant modifications were
found for this model. Finally, the estimation results indicate that the partial mediation
model B (Model 3) also provides acceptable level of fit (Chi-square/df=1.722, GFI=
.829, CFI=.913 and RMSEA=.490).
6.8.3 The Final Model
All structural models (Model 1, Model 2 and Model 3) were found to fit the data
adequately and meet the accepted standards for overall model fit. As the first two
models are nested with the last one, the difference in model fit between the three
models was examined, as shown in Table 6.14.


183

Table 6.14: SEM Statistics of Modes Fit
Model
Goodness Fit
Indexes
Recommended
Value
Model 1 Model 2 Model 3
Chi-square(
2
) - 1450 1380 1397
Degree of
Freedom (Df)
- 823 809 811